Dear Mom and Dad,
Good news, for the first time since 2009 the IRS has raised the gift amount allowable under the annual exclusion. In 2013 a person will be able to give $14,000 to any and each donee, free of gift tax (see Rev. Proc. 2012-41).
As an example, in 2013 I will be able to give each of my five children $14,000, or $70,000 total. Because my wife will also be permitted to make use of her own annual exclusion amount, together we can give up to $140,000 to our children next year, free of gift tax, under our combined annual exclusion amounts. Wow!
That’s nothing; you two, my dear father and mother, have 9 children and 21 grandchildren! That means if each of you makes a $14,000 gift to each of your 30 descendants, in 2013 you will be able to give away $840,000 free of gift tax, using your annual exclusion amounts (2 parents x 30 descendants x $14,000 = $840,000).
Let’s take it just one step further. I know you also love your 3 daughters-in-law and 3 sons-in-law. If you wanted to broaden your gifting activities to include them next year, you could give away another $168,000 (2 x 6 x $14,000) or $1,008,000 total!
Looks like all you need now is a million bucks! Sorry, can’t help you there.
With much love and best wishes for happy tax planning,