2021 Inflation Adjustments of Interest to International Tax Practitioners

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The IRS recently released its annual Revenue Procedure containing inflation-adjustments for 2021.[1] Of interest to international tax and estate planning practitioners are the following:

  • Estate and Gift Tax Basic Exclusion Amount: $11,700,000
  • Gift Tax Annual Exclusion Amount: $15,000
  • Increased Annual Exclusion for Gifts to Non-U.S. Citizen Spouses: $159,000
  • Tax Liability Threshold for Covered Expatriate Status: $172,000
  • Gain Exclusion Amount for Covered Expatriates: $744,000
  • Foreign Earned Income Exclusion Amount: $108,700

Practitioners should note that the estate and gift tax basic exclusion amount is only available to U.S. citizens and U.S. domiciliaries. Foreign individuals do not receive any exclusion amount for U.S. gift tax purposes (other than the annual exclusion amounts) and only receive a $60,000 exemption for U.S. estate tax purposes.

 

[1] Rev. Proc. 2020-45.

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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