IRS Raises Yearly Limit For Tax-Free Gifts
The Internal Revenue Service announced that it has raised the yearly limit on how much we can each give another person without having to worry about gift tax. Starting in 2013, the annual exclusion for gifts goes up to $14,000, from $13,000. Spouses can combine their annual exclusions to double the size of the gift.
Feeling very generous? Write two checks: one before Dec. 31 for $13,000, and the other on Jan. 1. for $14,000.
If you exceed the limits, you could wind up owing gift tax of up to 35%. Even if you don’t, your lifetime gifts would reduce how much you can pass tax-free through your estate plan.
Next year this whole system may change.