2019 IRS Estate and Gift Tax Exclusions
In this week's video, we discuss the 2019 Estate & Gift Tax Exclusion amounts and how they might fit into your estate plan.
Today we're gonna go over the 2019 estate tax and gift exclusion amounts. So, let's get started first with a little history lesson, and I promise that this one will be quick.
In Oklahoma, we no longer need to worry about Oklahoma estate tax, and that is because several years ago the state of Oklahoma abolished the Oklahoma estate tax. However, even after the Oklahoma legislature abolished the Oklahoma estate tax, there was still some instability and uncertainty because of federal estate taxes.
However, in 2013 the United States Congress passed the American Taxpayer Relief Act of 2013 and provided estate and gift tax exclusion amounts, and they've increased every year since with inflation especially in 2018. In 2018, the annual gift exclusion amount was $15000.
For 2019, it remains unchanged at $15000. However, the estate tax exclusion amount increased from 11.18 million to 11.4 million in 2019. Now, you should always consult with your CPA or tax professional to see what you might need to do, but let's look at what these numbers mean generally to you.
First, the $15000 annual gift tax exclusion means that you can give someone, anyone, annually up to $15000 tax-free. Now what's cool is this is per person. So a married couple can give someone up to $30000 annually tax-free. If you are married with three kids, then, potentially, as an example, you and your spouse could give each one up to $30000 annually. That's $90000 tax-free from your estate. Now, I should mention you can still give someone in excess of that amount. You just have to report the excess amount, and like I mentioned earlier, always check with your CPA or your tax professional first before you do any of this.
Now let's discuss the estate tax exemption amount. For 2019, it is now 11.4 million dollars per person. Now that is really significant because it was only five million dollars a couple of years ago. It also means that a married couple could potentially exclude 22.8 million dollars from the 40% federal estate tax. All of this happened because of the 2018 Tax Reform Act, but it is scheduled to sunset after 2025.
So, unless the United States Congress takes action before then, the exclusion amount reverts back to five million dollars adjusted for inflation in 2026. Now, these numbers are huge, and they really only affect a very, very small percentage of taxpayers.
For most people, the $15000 annual gift tax exclusion is probably more relevant. You know, if you have children who are just starting out in life or just got married, then the gift tax exclusion might be a good way to help them out with the down payment on a house, a new car, or even to jumpstart their own retirement, but like I've said, you need to discuss these exclusion amounts with a tax professional first.
So, to learn more call us for an appointment. Remember, our initial estate planning consultation here at the Cortes Law Firm is always free.
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