Changes to the Annual Gift Tax Exclusion To Take Effect In 2009

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Title:
Changes to the Annual Gift Tax Exclusion To Take Effect In 2009
Date:
November 1, 2008
Publication:
Tax and Trusts & Estates UPDATE
Area(s) of Practice:
Tax Law

The IRS recently released Revenue Procedure 2008-66, setting forth several items that will be adjusted for inflation in 2009. One of the more significant changes that will take effect next year is the increase in the annual gift tax exclusion, which will rise from $12,000 in 2008 to $13,000 in 2009. The annual gift tax exclusion is the amount that a donor may give to a single donee each year. There is no limit to the number of donees that may receive a gift each year. Married couples may elect to split their gift tax exclusions and gift $26,000 per donee per year.

Further, the annual gift tax exclusion for gifts to a spouse who is not a United States citizen will increase from $128,000 in 2008 to $133,000 in 2009. Transfers of unlimited value may be made to a citizen spouse; however, any transfer made to a non-citizen spouse in excess of $133,000 will be subject to federal gift tax.

Also, please remember to make any remaining gifts for 2008 by December 31 (see the guidelines discussed separately in this newsletter). Gifts made in 2008 which aggregate more than $12,000 for any donee (and all split gifts) must be reported on an IRS Form 709 United States Gift (and Generation Skipping Transfer) Tax Return filed with the IRS by April 15, 2009.