With the holiday season quickly approaching, now is a great time to educate yourself on the United States gift tax system. While gifts are generally thought of as being taxed, there are exceptions that exist. Some examples of nontaxable gifts include, gifts less than the exclusion amount, student tuition, medical expenses and gifts to your spouse. The annual exclusion gift is defined as a gift that is eligible for the annual exclusion from federal gift taxes. The exclusion amount is set each year by the IRS and rises with inflation. The 2017 annual gift tax exclusion amount is $14,000. This amount increased for 2018 to $15,000. This essentially means that an individual can gift this exclusion amount to an unlimited amount of people without having to deal with the IRS. However, if you gift above the annual exclusion amount, you must file a gift tax return in order to receive your lifetime exclusion.
Because the month of December is a time of gift giving, it is important to be aware of the consequences of manipulating the gift tax system. Estate-planning attorneys are good resources for individuals to get their questions answered. Their expertise and guidance of estate planning is helpful for individuals who want to better navigate the gift-giving holiday season. Lauren Richardson, PLLC is a law firm that deals with many estate planning cases and is open from 9:00 a.m. to 5:30 p.m. to offer you guidance and answer your questions.