2013 Gift Tax Rules In The U.S.
When discussing 2013 Gift Tax Rules, the most basic information to understand when you have gift tax questions is what the gift tax rates are and under what circumstances gift taxes have to be paid - and what the gift tax limits are when you receive a tax free gift.
The person giving the gift is usually the one to pay the gift tax.
However, there are situations within the Gift Tax Rules where a tax accountant or tax attorney may be able to figure out how to have the person receiving the gift (with the recipient's agreement) pay the Gift Tax.
Check it out thoroughly with your TAX PRO!
"Question: I understand that Congress is considering a so-called 'flat' tax system. How would this work?" Answer: If Congress were to pass a 'flat' tax, you'd simply pay a fixed percentage of your income, and you wouldn't have to fill out any complicated forms, and there would be no loopholes for politically connected groups, and normal people would actually understand the tax laws, and giant talking broccoli stalks would come around and mow your lawn for free, because Congress is NOT going to pass a flat tax, you pathetic fool." ~Dave Barry (www.QuoteGarden.com)
The good news on the Gift Tax Rules is that you can give and/or receive a considerable gift in the form of money or property from/to lots of other people -- every year -- without there being federal taxes due on it! There is no limit on how many people one person can give gifts to.
What is even better is that you can be the giver or receiver of a considerable gift in the form of good old fashioned cash (money) or property -- and it can be to or from the same person every year
-- without there being federal taxes due on it!
This is due to something called "exclusions."
Some people call them exemptions (more on this subject later) and all of this is explained with the Gift Tax Rules.
The bad news is that there is a limit to what the IRS considers to be considerable! Heck, surely there will be those of you who do not agree the amounts are considerable at all!
Actually, the IRS considers "any" gift to be a taxable gift albeit with the exemptions but you can be sure that once you go beyond your exemptions, Uncle Sam wants his tax revenue!
And remember, when a man wants his money, he usually gets it - especially when that man is Uncle Sam!!!
ANNUAL EXCLUSION AMOUNT
For gifts given in 2013, the giver can give up to $14,000 without having to file a Gift Tax Return. This amount has been in effect since January 1, 2013. So (and by the way, this part isn't bad; it's good again), until the current gift tax rules change, if you had 10 kids and 20 grand-babies, if you wanted to, you could give every one of them up to $14,000 - every year (that's $420,000.00 for those of you keeping score at home) - without having to even file a Gift Tax Return. When you die, none of that money you gave away every year would be part of your potentially taxable estate.
LIFETIME EXCLUSION AMOUNT
There is something called a "Unified Credit," which can be used over your lifetime to reduce or even eliminate any gift tax that may be due from one year to the next. However, you should know that the Unified Credit can also be used to reduce your estate tax if you were to inherit a taxable estate at some point.
Thus, any amount of the Unified Credit used to reduce or eliminate a gift tax in one year will reduce the amount of that credit available to you to use against estate taxes later.
Starting in tax year 2011, the unified credit that could be applied to "Gift Taxes" was $1,730,800 (exempting $5 million from tax)and it increased again in 2012 to $1,772,800 (exempting $5,120,000 million from tax). For 2013, the unified credit that can be applied to "Gift Taxes" is $2,045,800 (exempting $5,250,000 from tax)
When To File A Federal Gift Tax Form (Form 709)
- Educational: Educational expenses that you pay for another person.
- Medical: Medical expenses that you pay for another person.
- Political: Gifts given to a political organization for its use.
- Spousal: Gifts given to your spouse.
As part of the Gift Tax Rules, the Gift Tax Rate and available gift tax exclusions change every year. To see the what those are for each year, go to the IRS site, which we link to below.
Federal gift taxes must be filed on a calendar year basis, which means that for each year you made reportable gifts, you need to file one return using that year's form. You would simply list all gifts you are reporting made during the calendar year on one Form 709. This means, you must file a separate return for each calendar year a reportable gift is given (for example, a gift given in 2012 must be reported on a 2012 Form 709). Do not file more than one Form 709 for any one calendar year.
The GST (Generation Skipping Transfer) Tax
While we're not going to get in to the weeds on this one, the Generation-Skipping Transfer Tax, or GST, originated as part of The 1976 Tax Reform Act.
Taxes imposed here go after transfers of property or income that are part of trusts or direct transfers, which have beneficiaries more than one generation below that of the transfer-or.
While there are some exemptions, this tax is imposed when there is a termination by death of an interest in property, or a taxable distribution or direct skip.
Return from Gift Tax Rules to Easy-TAX-Information Home Page
Click Here For Gift Tax Return Form 709
For United States Gift (and Generation-Skipping Transfer) Tax Return Form 709 -- for years 2006 through 2009.
Within the Gift Tax Rules we've discussed here, we've provided the most basic information you might be interested in and we hope we have answered most of your Gift Tax Questions. For more detailed information or anything more complicated than what is covered here, check with your Tax Attorney and/or Accountant and you can
click here to go to the IRS website for more info on Gift Taxes.