For individuals concerned about estate taxes, annual gifting can be an important part of
estate planning. However, the federal gift tax exclusion amount changes frequently. Before making gifts in 2017, make sure you are familiar with the current gift tax exclusion amounts.The annual gift tax exclusion amount in the United States for 2017 is $14,000. The 2017 gifting limits generally apply to federal tax returns filed in 2018 for calendar year 2017.A smart, well planned gifting strategy is only one of the many methods available to minimize your tax obligations. To learn about the latest tax-saving strategies for 2017 and 2018, see Estate Tax Information.
How Much Can Married Couple Gift in 2017?
An estate planning strategy often used by married couples is gift splitting. Using the 2017 gift tax exclusion amount, a married couple can gift a total of $28,000 to any person or donee.
Estate Taxes and the Gift Tax Exclusion
How does gifting relate to your estate plan? In general, making gifts during your lifetime that comply with the annual gift tax exclusion amount is a method of reducing the size of your estate that may otherwise be subject to federal and state estate taxes. By reducing the overall amount of your estate that is subject to government taxes, you may be able to pass more family wealth and financial security on to the next generation. In this challenging economic environment, leaving an
inheritance for your children or other beneficiaries may be especially important. In many estates, however, the annual gift tax exclusion is not a factor. That is because the 2017 federal estate tax exemption amount is quite large. Therefore, if you have a small estate or do not have a significant amount of assets, your estate may not be subject to the federal estate tax. For detailed information on the federal estate tax, exemption amounts, and tax rates for 2017, go to estate taxes. To determine whether your estate or the estate of your spouse will be subject to estate taxes, consult an estate planning lawyer.
Have the Gifting Limits Increased?
If you used the federal gift tax exclusion as part of your estate planning strategy in the past, you may be wondering if the 2017 gifting limits have increased from last year. The answer is no. The gifting limits for 2017 did not increase from the exclusion amount for calendar year 2016. For an overview of how to use gifting as part of your estate plan, see gifts and gifting.
Annual Exclusion Amount for Gifts in 2017
For more details about the 2017 gifting limits, refer to Revenue Procedure 2016-55 which states in part, For calendar year 2017, the first $14,000 of gifts to any person, other than gifts of future interests in property, are not included in the total amount of taxable gifts under Section 2503 made during that year. To review information published by the IRS about 2017 gifting limits and related tax issues, visit the
Charitable Giving and Your Estate Plan
The annual gift tax exclusion is commonly used to give money to children or grandchildren while the donor is alive. However, many people also consider charitable giving an essential part of making an estate plan. If you have a charity or cause you want to support, you can also make gifts to qualified charities or entities that have been granted 501c3 status by the IRS. For an overview of steps you can take to include a charitable organization in your estate plan, go to
Consult Tax Advisor Before Gifting
Whether it makes sense for you to make tax-free gifts to take advantage of the 2017 gift tax exclusion amount depends on a variety of factors. Before making gifts from your estate, it is important to consider future expenses for long-term care or nursing home care, taxes and debts that may be owed by your estate, charitable giving goals, specific bequests you want to make in your will, unforeseen medical costs, funeral and burial costs, and other expenses you may have in the future. If you want to make a financial gift to your children, grandchildren or other heirs, but are unsure if you will need the money in the future, you may want to consider leaving the money to them in your will or an estate planning trust rather than making an inter vivos gift. Only a tax professional such as a CPA or accountant can properly advise you on the tax consequences of making gifts as part of your estate plan. Consult a reputable tax advisor that is familiar with your unique circumstances and estate planning goals. For help, go to
Find a Tax Professional. The best way to avoid unexpected tax penalties or negative consequences for your estate is to work closely with a tax professional.
This article was updated on October 28, 2016.
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