Estate and Gift Tax Exemptions for 2018

Whether there will still be an estate tax in 2018, and what is will look like, is  much in the news this week, as the House of Representatives released its Tax Reform Proposal.

Meanwhile, based on the laws that are still in effect today, the Internal Revenue Service has announced that the Unified Gift and Estate Tax exemption for someone who passes way in 2018 will be $5.6M.

This means that the value of lifetime gifts made by an individual during her lifetime, plus the value of her estate at the time of her death in 2018, must exceed $5.6M before her estate is liable for any federal estate tax.

If the person who dies in 2018 is married, then she can “port” the unused part of her exemption to her spouse, as long as the necessary forms are filed in a timely manner.  This means that the value of lifetime gifts plus the value of the estate of both spouses must exceed $11.2M (assuming the second spouse also dies in 2018) before any estate tax would be due.

The value of gifts that a person can make without having to report them is also increasing in 2018, up from $14,000, to $15,000 per individual and per recipient.  While larger gifts must be reported on an IRS Form 709 (and are therefore counted toward the the Unified Exemption described above),  gifts up to this threshold do not need to be reported.  This means that a married couple can give up to $30,000 to a specific recipient, and if they are making that gift to another married couple (such as a child and his spouse), they can give up to $60,000, without any documenation or reporting requirements.

Stay tuned to find out what will happen to these exemption amounts, or gift and estate tax in general, but this is what we know today!

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