New Tax Limits For 2014
By: Morris Law Group - April 15, 2014
Unified estate and gift tax exclusion amount:
For gifts made and estates of decedents dying in 2014, the exclusion amount is $5,340,000 (up from $5,250,000 for gifts made and estates of decedents dying in 2013).
Therefore, in 2014, each person has a credit that can be used to offset the estate tax on a taxable estate of up to $5,340,000.00 of assets. The practical application of this is that individuals can make gifts during life or transfers at death of up to this new higher limit and pay no federal estate tax. Moreover, spouses may combine their unused individual credit amounts and pass on assets free of estate tax on a taxable estate of up to $10,680,000.00 at the death of the second spouse, assuming none of these credits were used during their lifetimes and that a timely filed Estate Tax Return (Form 706) is filed.
Other estate limits that change in 2014 include:
Gift tax annual exclusion. For gifts made in 2014, the gift tax annual exclusion is $14,000 (same as for gifts made in 2013). Generally the amount that can be given to any individual each year that is excluded from the gift tax is $14,000 per person per year. Gifting parties may also use the technique of "gift splitting" or combining gifts, whereby they can each make a gift of $14,000, for a total amount of tax free gifts made of $28,000 to a single person or donee each year.
Generation-skipping transfer (GST) tax exemption. The exemption from GST tax is $5,340,000 for transfers in 2014 (up from $5,250,000 for transfers in 2013).
Increased annual exclusion for gifts to non-citizen spouses. For gifts made in 2014, the annual exclusion for gifts to non-citizen spouses is $145,000 (up from $143,000 for 2013).
Foreign earned income exclusion. The foreign earned income exclusion amount increases to $99,200 in 2014 (up from $97,600 in 2013).
** Disclaimer Required by IRS Circular 230** Unless otherwise expressly approved in advance by the undersigned, any discussion of federal tax matters herein is not intended and cannot be used 1) to avoid penalties under the Federal tax laws, or 2) to promote, market or recommend to another party any transaction or tax-related matter addressed.