2018 Gift Tax Returns

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Dickinson Wright

If you made gifts in 2018 now is the time to begin thinking about filing a gift tax return. If you made gifts in 2018 in excess of the gift tax annual exclusion amount ($15,000 per donee in 2018, or $30,000 if a husband and wife elect to split gifts and a gift tax return is required to make this election), you must file a gift tax return and apply your lifetime gift tax exemption to report these gifts. For gifts made in 2018 each person has a gift tax exemption of $11,180,000, reduced by the value of any prior lifetime gifts. Any gifts made in excess of the lifetime gift tax exemption are taxable at a rate of 40%. A gift tax return to report gifts made in 2018 is due on April 15, 2019, and may be extended until October 15,2019.

If you made a gift to a trust that has the potential to distribute property to a grandchild or later descendant, it is important to file a gift tax return to have a clear record of the Generation-Skipping Transfer (GST) tax exemption allocated to the trust. If a person relies on automatic allocation of GST exemption instead of filing a gift tax return it can be confusing at a later date to determine if a trust is GST exempt, so filing a gift tax return to affirmatively allocate GST exemption is a better practice even if automatic allocation may apply.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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