Definition: An annual exclusion gift is a gift that qualifies for the $13,000 per person annual exclusion from federal gift taxes. Married couples can combine their annual exclusion amounts and gift $26,000 to each person, per year without incurring any gift tax liability, but any gifts split between the husband and wife must be reported to the IRS on Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return. Note that the annual exclusion from federal gift taxes will increase to $14,000 on January 1, 2014.
Gifts made to a spouse who is a U.S. citizen are exempt from gift taxes due to the unlimited marital deduction, while gifts made to a spouse who is not a U.S. citizen have their own annual exclusion amount - $134,000 for 2010, $136,000 for 2011, $139,000 for 2012, and $143,000 in 2013.
The annual exclusion amount was indexed for inflation beginning in 1997 and increased from $12,000 in 2008 to $13,000 in 2009 and, as noted above, will increase for the first time in several years to $14,000 in 2013:
Chart Showing Annual Exclusion From Gift Taxes: 1997 - 2013
Other Terms Beginning With AAlso Known As: Annual Exclusion, Annual Exclusion Amount, Annual Gift Tax Exclusion, Annual Gifting Amount
