As this is being written, we are in the midst of the home stretch of the tax season. Each year the IRS handles countless different forms, and one of them is Form 709, also referred to as a gift tax return.
If you make taxable gifts in any given year, you are required to file Form 709. Generally, gifts become taxable when the total exceeds the annual per person gift tax exclusion. This exclusion was raised to $14,000 in 2013.
As a result, any present interest gifts made in 2013 are not taxable if they don’t exceed $14,000 to any single person. Note that you can make these annual tax-free gifts to as many people as you like.
As 2012 was coming to a close, there was a lot of hand-wringing about the estate tax and the gift tax. The unified lifetime gift/estate tax exclusion was $5.12 million in 2012, but was scheduled to be reduced to just $1 million in 2013 unless new legislation was passed.
Because of this, many people made large gifts in 2012. According to an interesting article on the Forbes website, the IRS will handle a larger-than-usual volume of 709s this year.
Fortunately, the estate tax exclusion did not go down to $1 million. Instead, the passage of the American Taxpayer Relief Act of 2012 raised the exclusion from $5.12 million to $5.25 million, including an annual inflation adjustment.
Be that as it may, those making taxable gifts in 2012 did benefit to some extent. The estate and gift tax rate for 2012 was 35%, but was increased to 40% this year.
Blaine Peterson
Author, Attorney
Parman & Easterday
Since founding Parman & Easterday in 1985, Larry has led over 1,000 free, community-service education programs and helped more than 10,000 Oklahoma families go from putting off their estate plan to getting it done. His goal for every client is the same: to become the person their family calls "the one who took care of everything."
Larry is the author of three books: The Straight Shooter's Guide to Estate Planning; Estate Planning Basics; and Guiding Those Left Behind in Oklahoma. He served as Oklahoma's Secretary of State and Secretary of Commerce, and his firm is the only member of the American Academy of Estate Planning Attorneys in the state.
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