IRS Raises the Estate and Gift Tax Exemption for 2019

Internal Revenue Service|Tax|Tax Reform

By Kari Tallarico

Property included in an individual’s estate at the time of death is subject to a tax by the federal government. There is, however, an exemption available to offset the tax, which is typically adjusted for inflation each year.

Under the Tax Cuts and Jobs Act signed into law on December 2, 2017, the federal estate tax exemption amount was doubled from $5.49 million per person for 2017 to $11.18 million per person for 2018. This lifetime exclusion is yet again on the rise.

In Rev. Proc. 2018-57, issued on November 15, the Internal Revenue Service announced a new limit for 2019. Now, an individual can pass $11.4 million to beneficiaries, tax free, whether at the end of his or her life or by gifts throughout. The number doubles to $22.8 million for married couples, though in order for the surviving spouse to claim the unused portion of their spouse, they must file an estate tax return and elect for portability.

In addition to this exemption, there’s also an annual gift exclusion component that currently stands at $15,000 per person ($30,000 per married couple). This means that an individual is able to gift up to $15,000 per donee without using any of the lifetime exclusion amount. For example, if an individual gifts each of their three children $15,000, they will have gifted $45,000 without using any of their $11.4 million exclusion. This amount will remain at $15,000 for 2019; it should be kept in mind when gifting throughout the year in order to maximize tax benefits.

You’ve heard our thoughts… We’d like to hear yours

The Schneider Downs Our Thoughts On blog exists to create a dialogue on issues that are important to organizations and individuals. While we enjoy sharing our ideas and insights, we’re especially interested in what you may have to say. If you have a question or a comment about this article – or any article from the Our Thoughts On blog – we hope you’ll share it with us. After all, a dialogue is an exchange of ideas, and we’d like to hear from you. Email us at contactSD@schneiderdowns.com.

Material discussed is meant for informational purposes only, and it is not to be construed as investment, tax, or legal advice. Please note that individual situations can vary. Therefore, this information should be relied upon when coordinated with individual professional advice.

© 2019 Schneider Downs. All rights-reserved. All content on this site is property of Schneider Downs unless otherwise noted and should not be used without written permission.