Gift Tax in The United States - Gift Tax Exemptions

Gift Tax Exemptions

There are two levels of exemption from the gift tax. First, gifts of up to the annual exclusion ($13,000 per recipient in 2009-2012) incur no tax or filing requirement. By splitting their gifts, married couples can give up to twice this amount tax-free (although they must file a gift return). Note that each giver and recipient pair has their own unique annual exclusion; a giver can give to any number of recipients and the exclusion is not affected by other gifts that recipient may have received from others.

Second, gifts in excess of the annual exclusion may still be tax-free up to the lifetime estate basic exclusion amount ($5,120,000 in 2012), although for estates over that amount such gifts might increase estate taxes. Taxpayers that expect to have a taxable estate may sometimes prefer to pay gift taxes as they occur, rather than saving them up as part of the estate.

Furthermore, transfers (whether by bequest, gift, or inheritance) in excess of $1 million may be subject to a generation-skipping transfer tax if certain other criteria are met.

Further information: Estate tax in the United States