This month I thought I would give you an update regarding taxes.
The two big items have to do with estate and gift taxes and the annual gift tax exclusion amount.
The unified credit with respect to estate and gift taxes is now $12,006,000.00 per person and if you are married it is $24,012,000.00. The new credit amount is up $306,000.00 per person from last year.
Basically, this means that while you are alive you can make a gift of up to $12,006,000.00 if single or $24,012,000.00 if married, with no gift tax consequences. If you have not used up this credit during your lifetime then whatever amount you have left can be applied against your estate, which means there is no estate tax for the unused portion of the $12,006,000.00 (if single) or $24,012,000.00 (if married) of the value of the assets in your estate.
The next change involves the annual gift tax exclusion. For the last few years you were allowed to make a gift of $15,000.00 per person per year without having to reduce your unified credit. This year the new amount is $16,000.00 per person per year.
So, let’s say you have three grown kids and you want to make a tax free gift to each of them. Under this new amount you could give them each $16,000.00 for a yearly total of $48,000.00. If you are married you could double that amount and make a total gift of $96,000.00 each and every year (or at least until Congress changes this rule).
PAT’S TIP: “A government that is big enough to give you everything you want is big enough to take everything you’ve got” Ronald Reagan