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Estate and Gift tax

Estate and Gift tax

Under the 2017 tax law, estates of decedents dying and gifts made after December 31, 2017 and before January 1, 2026, the estate and gift tax exemption amount increased from $5 million to $10 million, indexed for inflation which amounts to approximately $11,180,000 in 2018 ($22,360.000 per married couple).

Summary:

1- 2018 Annual Gift exclusion is $15,000 per person, per year;

2- Life-time Gift exclusion is $11,180,000;

3- Life-time Estate exclusion is $11,180,000; and,

4- Gift and Estate are unified. This means that at the time of individual’s death all prior years’ taxable gifts during life-time are subtracted from life-time Estate.

 

What is a gift?

Any transfer from one individual to another without receiving or expectation of full consideration. Any gift in excess of $15,000 per person, per year, must be reported to the IRS by filing a gift tax return the IRS Form 709.

 

Exclusions from gifts

Generally, all gifts are taxable gift, except the following:

1- Gifts that do not exceed the annual exclusion ($15,000 per person, per year for 2018);

2- Tuition for someone paid directly to the educational institution;

3- Medical expenses for someone paid directly to the medical services provider;

4- Gifts between spouses, subject to exception (foreign spouse);

5- Gifts to political organizations for their use, which are not tax deductible; and,

6- Gifts to qualifying charitable organizations under (501(c) (3) taken as itemized deductions.

 

Note: Generally, gifts to individuals are not tax deductible.

Comment:  These non-tax deductible gifts may be the most valuable gifts you will ever make, because you determine the real needy and deserving recipient. I encourage you do not hesitate making these gifts, and do not make the tax benefits your only gift purpose in life.

 

What is Estate Tax?

Estate tax is what is paid on transfer of property to loved ones at death. Gross Estate means the fair market value of a decedent’s total assets at death.

 

 

How Can We Help

Zaher Fallahi, Esq., CPA, is a California Estate Planning Lawyer, practices Tax and Business law, and has offices in Orange County and Los Angeles County.

Because of being a Certified Public Accountant (CPA) since 1983, he advises clients on tax implication of the issues involving Estate Planning and Asset Protection Planning.

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