Tax Guru – Ker$tetter Letter

Helping real people win the tax game.

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Gift Tax Exclusion

Posted by taxguru on January 26, 2005

Q:

Hello, I saw your website and was hoping you may be able to tell me what the allowable tax free gift amount is for 2005? Has it increased from the $11,000 in 2004 to $12,000 for 2005?

Thank you kindly,

A:

The annual exclusion is still $11,000 for 2005.

Unlike some tax items that are adjusted each year in small increments to account for the inflation rate, this is only allowed by law to be adjusted in $1,000 increments when the cumulative CPI change since the previous increase warrants it.  This means it may be another few years before another hike is required.

You can see more on this at the IRS’s website.

Kerry Kerstetter

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