Gift Tax Exclusion

The gift tax exclusion allows you to transfer your money or estate to another person free of tax or much lower than the original value of the gift given. This type of exemption is usually availed by those who want to protect their asset against the IRS or avoid paying the exorbitant death taxes. However, the $5 million gift tax exclusion will soon expire this year and replaced with a $1 million threshold. This means that after 2012, the gift tax exclusion will have a different rule which gives you a whopping 55% tax responsibility for every gift you give which is in excess of $1 million. This type of tax exemption should, however, not to be mistaken with the other type of tax exemption which is the annual gift tax exclusion. Unlike the former, the latter is an amount given by any person to an unlimited number of people free from any federal tax impositions.