New Opportunity Under the Federal Gift Tax
The 2010 Tax Relief Act, which was noteworthy for some of the most favorable estate tax provisions in decades, opened up an opportunity to give more than ever to friends, family, and favored causes while avoiding the federal gift tax.To make the most of tax-free gift transfers, a good first step is understanding the two types of federal exclusions (or exemptions) that apply to gifts. Annual Gift Tax ExemptionYou can transfer up to $13,000 in cash or certain types of property to as many people as you wish each year without any gift tax liability. (The exclusion is indexed annually for inflation.) Together, you and your spouse can give up to $26,000 annually. Your gift could be cash or income-producing assets such as stocks and bonds that have the potential to appreciate in value. Some gifts may not be subject to the annual limit, including gifts to your spouse (as long as he or she is a U.S. citizen), donations to qualifying charitable or political organizations, and payments of tuition or medical expenses on behalf of another person that are paid directly to the educational or medical institution. 
Lifetime Gift Tax ExemptionThe 2010 tax law reunified the federal estate and gift tax exemption, increasing it to $5 million in 2011 and 2012 (the gift tax exemption was only $1 million in 2010). There are two caveats associated with this change:
Because of the temporary nature of estate and gift tax laws, you may want to consult with your tax and estate professionals before you take any specific action. The information in this article is not intended as tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was written and prepared by Emerald. © 2011 Emerald Connect, Inc. |
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29691 Lorain Rd. N. Olmsted, OH 44070
Phone:
440.779.1430
800.859.8095
Fax:
440.779.0746
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