2013 and beyond.... The Estate Tax

Congress finally passed a bill preventing the formidable problem of the "fiscal cliff."  And, in that bill, Congress dealt with the estate tax.  As you may recall, we were scheduled to default back to a $1 million exemption with a rate of 55% for any amounts over the exemption.

However, with the passing of the bill, we now essentially have a continuation of the $5 million exemption, along with the inflationary adjustment.  The inflationary adjustment in 2012 resulted in $5,120,000.  We do not yet know the inflationary adjustment for 2013.  But, we do now know that you can still generally pass a little over $5 million dollars tax free upon your death.  While the tax rate for any amount over the $5 million exclusion was approximately 35% in 2012, that amount has been increased to a flat 40%.

Congress also adjusted the annual gift exclusion amount, which is adjusted from time to time for inflation.  In 2013, you can now generally gift $14,000 per recipient without filing a gift tax return or decreasing the amount you can pass at your death.

Disclaimer: IRS Circular 230 Notice:  Please be advised that this post should not be construed as tax advice.  Many factors affect your personal situation.  Any tax information contained in this blog or any postings (or in any attachments) is not intended or written to be used, and cannot be used, for the purpose of avoiding penalties under the Internal Revenue Code.