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In addition, the increase in exemption allows individuals (regardless of the size of their estate) to make gifts during their lifetime of up to $5,120,000 before December 31, 2012, without incurring a gift tax.
The annual gift exclusion remains $13,000 in 2011 and 2012. See Annual exclusion, later, for more information. The basic exclusion amount for gifts made and estates of decedents who died in calendar year 2011 is $5,000,000, and $5,120,000 for gifts made and estates of decedents who die in 2012. IRS Publication 950: Introduction to Estate and Gift Taxes [2011] cch.com document federal irs cch.com document federal irs
A penalty is usually charged if your Form 709 is filed after the due date (including extensions). It is usually 5% of the tax not paid by the original due date for each month or part of a month your return is late. The maximum penalty is 25%. You might not owe the penalty if you have reasonable cause for filing late. Form 8892 (Rev. December 2022) - IRS irs.gov pub irs-pdf irs.gov pub irs-pdf
If youve transferred money directly from your bank account in giving your gift, the IRS can find out about this. The IRS is generally unlikely to find out about a gift normally. However, if you get audited, the IRS will know. You could then be subject to penalties for not reporting the gift. How Does the IRS Know If You Give a Gift? - Taxry taxry.com blog irs-know-you-give-gift taxry.com blog irs-know-you-give-gift
Federal Estate and Gift Tax Rates, Exemptions, and Exclusions, 1916-2014 YearEstate Tax ExemptionAnnual Gift Tax Exclusion2010$5,000,000$13,0002011$5,000,000$13,0002012$5,120,000$13,0002013$5,250,000$14,00033 more rows Feb 4, 2014
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List all reportable gifts made during the calendar year on one Form 709. This means you must file a separate return for each calendar year a reportable gift is given (for example, a gift given in 2023 must be reported on a 2023 Form 709). Do not file more than one Form 709 for any 1 calendar year. 2023 Instructions for Form 709 - IRS irs.gov pub irs-pdf i709 irs.gov pub irs-pdf i709
For Gift Taxes: 2502) shows the 35% rate being imposed on transfers in excess of $500,000, the gift tax applicable exclusion amount effectively precludes taxation of any transfers in an amount below $1 million in 2010, $5 million in 2011 and $5,120,000 in 2012.
The gift, estate, and GST tax exemptions were $5 million in 2011. The exemptions are indexed for inflation, resulting in exemptions of $5.12 million for 2012, $5.25 million for 2013, $5.34 million for 2014, $5.43 million for 2015, $5.45 million for 2016 and $5.49 million for 2017.

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