Lifetime Estate and Gift Tax Exemption
- If one gifts an amount that is above the annual gift tax exclusion ($17,000 for 2023), he or she will use a portion of his or her lifetime unified estate and gift tax exemption ($12.92 million in 2023).
- The increase of the estate and gift tax exemption means married couples can shield a total of $25.84 million ($1.72 million more than in 2022) without having to pay any federal or estate gift tax.
- If one makes gifts in excess of the annual gift tax exclusion, one must file a gift tax return, due April 15th of the following year, to report the gift and track the amount of the lifetime exemption that has been used.
- Remember that these are federal laws; states may have their own exemption amounts, often lower than the federal exemptions. It is possible that state tax is due even through there is no federal tax.