2011 Gift Tax Rules In The U.S.

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 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!

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 2011, the giver can give up to $13,000 without having to file a Gift Tax Return. This amount is the same as it was for both 2009 and 2010. 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 $13,000 - every year (that's $390,000.00 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 can be applied to "Gift Taxes" is $1,730,800 (exempting $5 million from tax), and it will increase again in 2012 to $1,772,800 (exempting $5,120,000 million from tax).

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 2009 must be reported on a 2009 Form 709). Do not file more than one Form 709 for any one calendar year.

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.



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.

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