Gift and Estate Tax Questions

[inquisitive]

Once the lifetime annual exclusion is reached on the gift tax, does the exceeding amount get added to income and taxed at whatever the tax bracket is?

For the estate tax, starting in 2009, can one get a $1,000,000 gift tax exclusion if it had not been used before in addition to the $3.5 million estate tax limit for a total of $4.5 million?

 

[2B]

If you are worried about these amounts of money, I suggest you get a real tax attorney or CPA to handle the transactions.

 

[LOL!]

Actually it's easier and quicker to read the IRS publication on this issue to get the answer than going to an attorney, CPA or even this forums. Find the pub at www.irs.gov quicker than it took you to read this response.

 

[ronin]

It's a unified credit so the exclusion amount is over transfers while living and after death. The tax rate is essentially 45%, since all the lower brackets are under the exclusion amount.

 

[kaneohe]

My guess, worth what you paid for it, ...........annual exclusion currently $12K/donor/recipient. Anything above that gets deducted from your lifetime exclusion of
1M and needs to be reported. When you get above 1M, I think you have to pay gift tax (not income) and at rate something like the 45% quoted by ronin.

Used to be a unified gift/estate of some amount. Later when estate limits were raised, gift stayed at 1M. I don't think it is added to the 3.5M but is a part of it.....
so, for example if you have an estate of 2.0M, no tax.....but if you gave it away during your lifetime (and assuming all of it was in excess of the annual limits), 1.0M of it would be taxed.