Other Tax Issues of Interest
Unified Credit
A credit is an amount that eliminates or
reduces tax. You are automatically given a unified credit of
$220,550 to use over your lifetime. You subtract the unified
credit from any gift tax that you owe. If you do not use the
entire $220,550 to eliminate the gift tax, your estate can use
the rest to eliminate or reduce estate tax.
Credit's Effect. The credit of $220,550
eliminates taxes on a total of $675,000 of taxable gifts and
taxable estate.
You use the credit to eliminate gift tax
on up to $675,000 of taxable gifts you give during your lifetime.
If you give less than $675,000 of taxable gifts during your
lifetime, any remaining credit is used to eliminate or reduce
tax that may be owed on your taxable estate.
For examples of how the credit works, see
Applying
the Unified Credit to Gift Tax
Applying
the Unified Credit to Estate Tax.
The following table lists the unified credit
for years after 1999.
Unified Year Credit:
2000 and 2001
2002 and 2003
2004
2005
After 2005
|
Unified Credit:
220,550
229,800
287,300
326,300
345,800
|
Exclusion Amount:
675,000
700,000
850,000
950,000
1,000,000
|
Important References
Publication
950
Estate and Gift Taxes
Publication
553
Highlights of 2001 Tax Changes