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Annual Gift Tax and Estate Tax Exclusions Are Increasing in 2022
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Home » Annual Gift Tax and Estate Tax Exclusions Are Increasing in 2022

Annual Gift Tax and Estate Tax Exclusions Are Increasing in 2022

January 15, 2022 by Girum Tesfaye

The amount you can gift to any one person without filing a gift tax form is increasing to $16,000 in 2022, the first increase since 2018. The federal estate tax exclusion is also climbing to more than $12 million per individual.

The IRS’s announcement that the annual gift exclusion will rise for calendar year 2022 means that any person who gives away $16,000 or less to any one individual (anyone other than their spouse) does not have to report the gift or gifts to the IRS. Any person who gives away more than $16,000 to any one person is required to file Form 709, the gift tax return. 

The basic federal estate tax exclusion amount for the estates of decedents dying during calendar year 2022 will be $12,060,000 for individuals and $24,120,000 for couples, up from $11.7 million and $23.4 million for calendar year 2021. The increase in the estate tax exclusion means that the lifetime tax exclusion for gifts should also rise to $12,060,000, as should the generation-skipping transfer tax exemption. 

This $12,060,000 million lifetime gift tax exclusion means that even if you are required to file Form 709 because you gave away more than $16,000 to any one person during the year, you will owe taxes only if you have given away more than a total of $12,060,000 million in the past. As a result, under current rules the filing of Form 709 is irrelevant for most people because the vast majority do not have $12,060,000 million to give away.  Still, Congress could change the exclusion limit, and the lifetime exclusion is slated to drop in half in 2026, causing some additional estates to be taxable.  To stay within the IRS’s rules without the bother of filing a gift tax return or the (small) risk of a much lower threshold, consider gifting up to the $16,000 limit to multiple family members or other individuals.  

For details from the IRS on many of these and other inflation adjustments to tax benefits, go to: https://www.irs.gov/pub/irs-drop/rp-21-45.pdf

Tesfaye Law

Disclaimer: This is made available by Tesfaye Law for educational purposes only and should not be relied upon as legal advice.  Please consult with a qualified attorney or contact our office at 703.705.2011 to schedule an appointment for a confidential consultation.

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Girum Tesfaye
Girum Tesfaye
Girum (“Groom”) Tesfaye, provides extensive estate planning services to individuals and businesses in the DC Metropolitan area (the DMV). His primary focus is to help client’s avoid probate, protect their assets, and provide for the security of their loved ones with a well-crafted estate plan.

Girum’s background as a litigation attorney in state and federal courts gives him a unique set of skills when representing members of our diverse community in the DMV. Particularly, He has gained recognition for creative planning and execution of estate plans for non-residents with business interests in the U.S.
Girum Tesfaye
Latest posts by Girum Tesfaye (see all)
  • What Estate of Marion Levine Means for Life Insurance - April 4, 2022
  • The Evolution of our Unified Estate and Gift Tax System - February 1, 2022
  • Annual Gift Tax and Estate Tax Exclusions Are Increasing in 2022 - January 15, 2022

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