← FarmCPA Home

Annual Exclusion Update

By: | Trackback URL | 1 Comment

December 19th, 2012

I was talking with a reader from North Carolina today about our post from yesterday.  He was not sure if the annual exclusion amount was or was not included in the lifetime.  So, I have decided to do one more update on this subject. 

The first $13,000 ($14,000) of gifts that you give to everyone person each year are exempt for any gift taxation.  It is only when you go  above the this level, that you then start to eat into the lifetime exclusion. 

For example, if you give $12,000 of cash to Jim and $15,000 of cash to Jane, Jim’s gift is part of the annual exclusion and is not reported to the IRS at all.  Jane’s gift must be reported to the IRS on form 709 and the first $13,000 is exempt and the remaining $2,000 is then used to reduce the lifetime exclusion.  For 2012, assuming you had never made any gifts, your lifetime exclusion would drop from $5,120,000 to $5,118,000 after filing the gift tax return.

In brief, if you make gifts under $13,000, no reporting to IRS and no reduction in your lifetime exclusion.  For gifts over $13,000, only the amount over $13,000 is used to reduce your lifetime exclusion amount.

Remember that these rules are on a donee by donee basis.  So 10 gifts of $12,000 to 10 children/grandchildren/friends are both not reported to the IRS and do not reduce your lifetime exemption.

 

Paul Neiffer

Paul Neiffer is a certified public accountant and business advisor specializing in income taxation, accounting services, and succession planning for farmers and agribusiness processors. Paul is a partner with CliftonLarsonAllen in Yakima, Washington, as well as a regular speaker at national conferences and contributor at agweb.com. Raised on a farm in central Washington, he has been immersed in the ag industry his entire life, including the last 30 years professionally. In fact, Paul drives combine each summer for his cousins and that is what he considers a vacation. Leave a comment for Paul. If you would like to leave a comment for Paul, follow the link above, however, please make sure to include your email address so that he can reply to your comment (your email address will not automatically show up).

More Posts - Website

Follow Me:
Twitter

← FarmCPA Home

1 Comment

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>

Subscribe to this blog by:

Previous Posts

Events

View upcoming speaking engagements and other networking events for Paul Neiffer and CliftonLarsonAllen’s agribusiness team.

See All

  • Twitter Feed

    Just saw a bighorn sheep eating grass in the bank next to the freeway. Less than 30' from my car. 5 days ago

    After 82 days in a rental car my wife has talked me into a cruise. We leave Thursday for Miami. Can't wait 7 days ago

    Will final ear weights set a new record. If so final corn yield will be going higher (unless we get an early hard freeze) 1 week ago

    Getting Train the Trainer info on the new Dairy Margin Protection program today in Denver. Learning a lot so far 1 week ago

    Has the chatter on an early freeze disappeared or is it just dormant 2 weeks ago

    Ag Economy; Policy Issues; and, Political Notes: farmpolicy.com/2014/09/05/ag-… 2 weeks ago

    Nothing prettier in August than to see rain water on the ground. At least the crops like it 4 weeks ago

    If tenants have compensated landlords fully for cash rents over the last few years, it will be much easier to get them to accept lower rents 4 weeks ago

    Is this Russia / Ukraine a case of buy the rumor / sell the news 4 weeks ago

    Nice rain and warmer temps yesterday should make good growing conditions 4 weeks ago