Beth Pinsker: Don’t have $13 million? The lifetime estate- and gift-tax exemptions for 2023 still matter to you.

by | Oct 19, 2022 | Stock Market

The wealthiest families in the U.S. will get a bit of inflation-adjusted relief from the IRS in 2023, with the lifetime estate-tax exemption increasing to $12.9 million for individuals, up from $12.06 million (and to $25.84 million for couples, up from $24.12 million). The annual gift-tax exclusion will go to $17,000, up from $16,000.  Estate-tax limits jumped significantly in 2018 with the adoption of the Trump-era Tax Cuts and Jobs Act and are indexed for inflation along with myriad other annual items, like tax-bracket thresholds, the standard deduction and the limit on FSA contributions. 

While most IRS changes affect millions of Americans as they file their annual tax returns, estate and gift taxes are affecting fewer and fewer people as the limits go up. The number of people who filed an estate-tax return dropped 60% from 2010 to 2019, according to the IRS, with the most returns coming from California. In 2020, the IRS logged only 1,275 taxable-estate returns.  Gifts below the annual gift-tax exclusion don’t have to be reported (gifts above the limit go on Form 709), so it’s not clear how many people make such gifts. But at its most basic, this kind of giving is as common as a birthday check from Grandma — only some checks are bigger than others.  And although changes to the estate- and gift-tax limits may not affect the majority of Americans directly, the concepts behind estate planning are important for people at every income level. For those with …

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