In some scenarios, the legislation is as notable for the thing it does not change as the thing it does. For instance, take last December tax bill where the job creation act, tax relief, and unemployment reauthorization liberalized many of the rules for estate planning and gifting at least through 2012.

This act increased the lifetime gift tax exemption, that is, the amount of property or money that someone can gift in their lifetime without incurring any gift tax. The exemption was increased from five million dollars, which in the previous was one million in the year 2010

The legislation did not eliminate or change a number of powerful planning techniques that had been the focus of negative attention by the Congress and IRS as most people had speculated it to change or eliminate. The exemption amounts and the beneficial rates that these techniques leverage are, however, set to expire after the year 2012, so timing is critical. With less predictably, the techniques themselves may be eliminated or curtailed y upcoming, therefore further increasing the urgency.

As a repercussion of uncertainties about their future and liberalized gifting rules, the legislation has therefore created an obvious incentive to reduce the size of your taxable estate over the next two years through gifting.

Below are some of the tax advantages of gift-giving that you should be aware of and maybe encourage you to get your family, friend, or stranger that Christmas food hampers this coming Christmas holiday season


Taxpayer sometimes fails to recognize that they are capable of giving thirteen thousand dollars per year to as manydonee as they desire. Note that this type of gift must be a present interest gift as defined by Internal Revenuecase law, Code, and Regulation.. Where the recipient can enjoy such an immediate gift benefit in a great way is basically a present interest gift. The advantage here can be seen when the gift maker gives this kind of amount to, say, five children during that particular year.

Therefore, this will enable him to transfer sixty-five thousand dollars without any gift tax or any estate costs to the beneficiaries. If this were probably done over a ten year period, then the amount exempted from gift taxes and the estate tax would be six hundred and fifty thousand dollars. With forty-five per cent as the highest marginal federal estate tax bracket, the saving would be two hundred and ninety-two thousand dollars.These gifted amounts may not be taxable for state inheritance tax purposes in addition to this


.Another tax advantage of gift-giving is that the spouse is capable of joining in a present interest gift for an additional thirteen thousand annually done exclusion. This, therefore, would double the spouse saving set out in the previous example.


Particular gifts can be made beyond and above the annual done exclusion without limits. The gifts made due to direct payments of tuition expenses and medical expenses paid on behalf of another are not taxable as long as the payments are made directly to the school or medical provider.