As per the 2015 estate and gift tax rules announced by the IRS, the federal estate tax exemption increases to $5.43 million per individual, while the annual gift exclusion amount remains the same at $14,000, notes Forbes. Americans can now gift bigger amounts to their heirs free of tax.Continue Reading
The federal estate tax exemption determines the amount that a person can pass on to his heirs tax-free. As per the new rules, $90,000 more can be passed on tax-free in 2015 compared to 2014, Forbes explains.
As the gift tax is directly affected by the federal estate tax, inflation indexing helps property owners enjoy tax-free lifetime gifting, according to Forbes. These gifts, however, count against the eventual estate tax exemption amount. A husband and a wife get their own exemptions.
The annual gift tax exclusion amount refers to the amount that an individual can give away to as many persons as he wishes, and it is separate from the lifetime gift exemption. Gifts made in lieu of health, education and dental expenses remain unbound by limits.
Federal kiddie tax applies to gifts made to the children of the family, Forbes states. The child is not required to pay tax for the first $1,050 he receives as gift.Learn more about Taxes