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Gifting - Tax Liability

Tax Liability
The American Taxpayer Relief Act of 2013 solidified the federal estate tax for the foreseeable future and adopted tax rates that are higher than those that were previously in effect. The maximum rate is now 40% and $5,340,000 of transfers are exempt from tax. In addition, any portion of the $5,340,000 exemption unused by the estate of a first-to-die spouse may be used as an additional exempt amount by the surviving spouse for both gift and estate tax purposes if a proper election is made.

The donor is responsible for paying the gift tax. If a trust or estate makes the gift, the individual beneficiaries are considered the donors. If the donor does not pay, the recipient has to pay the tax.

Taxable Gift or Estate Tax Tentative Tax
From To Tax Rate on Excess
$0 $10,000 $0 18%
10,000 20,000 1,800 20%
20,000 40,000 3,800 22%
40,000 60,000 8,200 24%
60,000 80,000 13,000 26%
80,000 100,000 18,200 28%
100,000 150,000 23,800 30%
150,000 250,000 38,800 32%
250,000 500,000 70,800 34%
500,000 ….. 155,800 35%
Sample Questions 1 - 5
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