This article details key updates to gift tax exemption limits in 2018, including annual and lifetime exemptions, filing requirements, and strategic gifting tips. It serves as a helpful guide for individuals looking to optimize their gift-giving strategies while minimizing tax liabilities. Whether you're planning large gifts or just want to understand tax implications, these insights assist in effective estate planning and compliance with IRS regulations.

2018 Updates on Gift Tax Limits

Gift tax is imposed when ownership of assets is transferred without expecting repayment. It includes cash, property, stocks, and other tangible or intangible assets given without full compensation. Recipients may pay less than the asset’s value or cover the tax for the giver if the exemption is exceeded.

In 2018, the IRS raised the annual gift exemption to $15,000 per person, up from $14,000, reflecting inflation adjustments. This change enables taxpayers to gift larger amounts without incurring gift taxes.

Key 2018 Gift Tax Policy Updates

The annual gift exclusion has increased to $15,000 due to inflation, allowing individuals to gift more annually without tax liability. Married couples can pool their exemptions for up to $30,000, up from $28,000, using the split gift rule. The lifetime estate and gift tax exemption for 2018 is $5.6 million, meaning gifts above the annual limit may reduce this exemption. Certain transfers—such as donations to charities, educational payments, spousal, or medical gifts—are exempt from gift tax. Promotional items like prizes are also excluded if no personal benefit is gained.

Gift Tax Filing Procedures

If gifts exceed the annual exemption, a gift tax return must be filed. Spouses filing separately must do so individually. The deadline aligns with income tax due dates—April 15, or the next business day if it falls on a weekend or holiday. If the donor died in 2017, the estate's executor should submit Form 709 by April 17, or the extended deadline. Strategic multi-year gifting can help minimize tax burdens, such as gifting $70,000 in one year and $75,000 the next.

Important Note:

This summary offers general insights into gift taxation and estate planning. For tailored advice and current details, consult with a tax professional or relevant authorities. Our site does not cover every possible scheme or benefit for individual situations.