2009 Annual Gift Tax Exclusion Rises
There may be a few folks left standing who could use this information, LOL....some helpful hints about using the Gift Tax Exclusion to assist in estate planning.
From WSJournal column by Tom Herman:
""Q: I read your recent article in which you said that the annual gift-tax exclusion will go up in 2009 to $13,000. Could you tell me what tax form to use to file for this annual gift-tax exclusion?
A: Good news: You don't have to fill out any Internal Revenue Service forms as long you follow the rules.
As I reported, IRS officials recently confirmed that the annual gift-tax exclusion will increase next year to $13,000 from the $12,000 of this year, 2007 and 2006. The increase reflects inflation adjustments required by law.
The gift-tax exclusion means you are allowed to give away as much as $13,000 next year to anyone -- and to each of as many people as you want -- without having to fill out any IRS forms or to worry about income-tax issues.
The lucky recipient of your generosity doesn't have to be a child or even a relative. It can be anyone at all. Many wealthy people take advantage of the gift-tax exclusion each year as an estate-planning tool.
Just remember you can't deduct gifts unless you make them to qualified charitable institutions and unless you itemize your deductions. (Nearly two-thirds of all taxpayers take the standard deduction each year, instead of itemizing.) You may think of a gift to your child as a noble act of generosity, but that doesn't make it tax-deductible.
I also mentioned recently there are certain ways to give away even more than the annual exclusion without having to report it to the IRS: You can pay for someone else's medical or tuition expenses without having those payments count toward the annual limit.
"For example, a grandmother who wishes to help pay for a granddaughter's education can write tuition checks directly to the school without making a taxable gift," says a new Deloitte Tax LLP publication. "Tuition is not limited to college tuition; any level of school tuition qualifies for this exclusion. Medical does not just mean doctors and hospitals; any medical expense, including insurance, can be paid under this exclusion."
Some people, encouraged by an IRS ruling several years ago, even have prepaid tuition expenses for students years in advance.""