We are getting down to the wire and you are doing your last minute Christmas shopping. You just cannot think of the perfect gift for that special someone. Well, how about giving them cash? The federal annual gift exclusion allows each individual to give up to $13,000 each year to anyone they choose free of gift taxation. The gift also removes the cash from your estate, if you need to lower your estate for gift tax purposes. However, time is running short for 2009. If you have not already made the gift in 2009, you have until December 31.
Life time Gift Exclusion
Thinking really big this Christmas, and the $13,000 annual exclusion is just not enough for the gift you had in mind? Well you have a $1 million life time exclusion that you can tap into over and above the $13,000 gift exclusion discussed above. You will have to file a gift tax return if you tap into this one, but you will have no gift tax on the gift you make up to the unused portion of your $1 million lifetime exclusion. Again, this gift will take the asset out of your estate for estate tax purposes.