Annual Gift Exclusion Increase

The Federal  annual gift exclusion is the amount a person is allowed to give to another person without incurring the Federal gift tax.  The 2009 annual gift exclusion has increased to $13,000 from $12,000 for "present interest gifts".  Furthermore, each spouse has their own annual gift exclusion and therefore each married couple can gift up to $26,000 tax free for 2009.  Gifts of up to $12,000 per donor should be made before the year end of December 31, 2008, to take advantage of the annual gift exclusion for 2008. Although there is no limit to how many different people you can gift to, certain restrictions apply.  To qualify, a gift must be of a "present interest," meaning that the recipient can make use of the gift immediately, and the donor must not have any control over the asset after it is given.  Annual gift exclusions are a great way of removing assets from your estate annually tax-free. 

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