The IRS announced in Revenue Procedure 2019-44 that the 2020 gift tax annual exclusion will remain at $15,000 and the unified estate tax and lifetime gift exclusion amount will rise to $11,580,000 per person or $23,160,000 per couple in 2020.
In 2020 any person can gift up to $15,000 to another person using the annual gift exclusion and without using any of his/her lifetime estate and gift exclusion. Married couples can gift up to $30,000. For example, a husband and wife with 3 children could gift up to $90,000 without using any of their lifetime exemption amount (the $11.58 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 gift amount.
The 2020 lifetime exclusions rose $180,000 from the 2019 amount of $11,400,000 to $11,580,000. 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 $11,580,000 per person amount means a married couple can transfer as much as $23,160,000 to others (during life or at death) before paying estate tax. The Revenue Procedure also announced an increase of the Generation-Skipping Tax (GST) exclusion to $11,580,000 for transfers in 2020.
The ability to use a Deceased Spouse’s Unused Exclusion (often called DSUE or “portability”) continues to be available in 2020. 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.
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