All individuals have the opportunity to give gifts annually to any person without having to file a gift tax return. For 2012, the amount of the annual exclusion is $13,000.
This means that anyone can give a gift of up to $13,000 to any person for any reason without worrying about possible gift tax implications. A married couple can double this amount to $26,000.
In 2013, this annual exclusion amount will increase to $14,000 ($28,000 for couples).
For amounts given in excess of the annual exclusion amount, every individual has a lifetime exclusion amount, against which the excess gifts are credited. For 2012, the lifetime exclusion amount is $5,120,000. This lifetime exclusion amount is one of the tax law provisions that is set to expire at the end of 2012, along with the other “Bush Tax Laws”.
If allowed to expire, the lifetime gift tax exclusion amount will revert to the 2001 amount, which was $1,000,000. It’s hard to guess exactly how Congress will handle this particular provision, but it is anticipated that the majority of the Bush Tax Laws will be extended intact.