Tax Insights

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Estate and gift exemption increases to $11.4 million in 2019

estate and gift exemption, tax, giving, estate planningThe IRS announced in Revenue Procedure 2018-57 that the 2019 gift tax annual exclusion will remain at $15,000 and the estate and gift exemption amount will rise to $11,400,000 per person, or $22,800,000 per couple, in 2019.

In 2019, you can gift up to $15,000 to another person using the annual gift exclusion and without using any of your lifetime estate and gift exclusion. Married couples can gift up to $30,000. So, for example, a husband and wife with three children could gift up to $90,000 without using any of their lifetime exemption amount (the $11.4 million each).

As in prior years, payments made directly to educational organizations for tuition or to medical providers for medical care expenses for the benefit of an individual don’t count towards the annual gift exclusion amount.

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The 2019 estate and gift exemption rose $220,000 from the 2018 amount of $11,180,000 to $11.4 million – a nice round number that is easier to remember. These higher estate and lifetime gift exclusion amounts will be adjusted each year for inflation but are scheduled to revert to pre-2018 levels after December 31, 2025.

The $11.4 million per person amount means a married couple can transfer as much as $22.8 million to others (during life or at death) before paying estate tax.

Also coming is an increase of the Generation-Skipping Tax (GST) exclusion to $11.4 million for transfers in 2019.

The ability to use a Deceased Spouse’s Unused Exclusion (often called DSUE, or “portability”) continues to be available in 2019. The personal representative must timely file a Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return to claim this benefit or file within two years of death if an estate return was not required otherwise.

Melinda Nelson, CPA