Gift tax exclusion, estate and gift exemption rise in 2018

Your Guide to State, Local, Federal, Estate + International Taxation

gift tax exclusion, estate tax, gift tax, exemption, IRSThe IRS announced in Revenue Procedure 2017-58 that the gift tax exclusion will rise to $15,000 in 2018. The 2017 exclusion of $14,000 has been in place since 2013.

Using the annual gift tax exclusion, in 2018 any person can gift up to $15,000 to another person without using any of his/her lifetime estate and gift exemption. Married couples can gift up to $30,000. So for example, a husband and wife with 3 children could gift up to $90,000 without using any of their exemption amount (the $5.6 million each).

As in prior years, payments for the benefit of an individual made directly to qualified educational organizations for tuition or to providers for medical care expenses are excluded from the gift computation.

Assuming the estate tax is still in place and in its current form in 2018, the 2018 unified estate tax exclusion for decedents dying in 2018 and the gift tax lifetime exclusion for 2018 will rise to $5,600,000 – a nice round number.

This is an increase of $110,000 from the 2017 amount of $5,490,000.

The $5,600,000 per person amount means a married couple can transfer as much as $11.2 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 $5,600,000 for transfers in 2018. The 2017 GST exemption amount was $5,490,000.

The ability to use a Deceased Spouse’s Unused Exclusion (often called DSUE or “portability”) continues to be available in 2018. The personal representative must timely file a Form 706 United States Estate (and Generation-Skipping Transfer) Tax Return to claim this benefit.

Henry+Horne professionals are available to answer your questions regarding your gift or estate planning.

Melinda Nelson, CPA