30th Sep 2012
The annual gift tax exclusion is an amount that an individual can give to as many other individuals as he or she desires in a given year without incurring any gift tax liability.1 On January 1st, the exclusion resets and the individual can make additional gifts. The exclusion for 2012 is $13,000 and is indexed for inflation, but is only increased when the inflation factors would reach the next thousand dollar mark.
According to the Research Institute of America (RIA), the exclusion is expected to increase to $14,000 in 2013. Once confirmed, this will impact those making annual gifts, whether such gifts are intended to reduce the individual’s taxable estate, pay life insurance premiums via an Irrevocable Life Insurance Trust (ILIT) or represent one-time gifts to individuals.
1. Gifts of tuition and medical expenses paid directly to the providing institution are not subject to this limit.