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Gift tax exclusion increases to $13,000 in 2009

The amount that you can give to someone without having to pay the federal gift tax has been increased to $13,000 a year, effective for 2009. The previous maximum was $12,000 a year. Many people will want to take advantage of this new limit to increase their annual giving as part of their estate plan.

The limit is the amount that any one person can give to any other person. So for instance, if a married couple has three children, each spouse can give each child $13,000 in 2009. That’s a total of $78,000 that can be transferred to the next generation completely tax-free each year.

You can increase this total further with gifts to sons-in-law, daughters-in-law, grandchildren, etc.

The change is the result of an inflation adjustment by the IRS.

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