Wealthy Americans Rushed to Take Advantage of Huge Tax Break

What's Hot


How to Cut the Cable TV Cord in 2017Family

8 Major Freebies and Discounts You Get With Amazon PrimeSave

8 Creative Ways to Clear ClutterAround The House

Study: People Who Curse Are More HonestFamily

This Free Software Brings Old Laptops Back to LifeMore

Pay $2 and Get Unlimited Wendy’s Frosty Treats in 2017Family

The 3 Golden Rules of Lending to Friends and FamilyBorrow

6 Reasons Why Savers Are Sexier Than SpendersCredit & Debt

Resolutions 2017: Save More Money Using 5 Simple TricksCredit & Debt

Porta-Potties for Presidential Inauguration Cause a StinkFamily

Protecting Trump Will Cost Taxpayers $35 MillionFamily

Tax Hacks 2017: Don’t Miss These 16 Often-Overlooked Tax BreaksTaxes

5 New Year’s Resolutions That Will Pay Off 10 Years From NowCollege

10 Simple Money Moves to Make Before the New YearFamily

They thought the tax break on $5 million in nontaxable gifts would end in 2012, but Congress extended it and made it bigger.

Want some evidence that the rich are concerned about taxes?

Consider the IRS report that shows that U.S. taxpayers claimed four times more nontaxable gifts on their 2012 tax returns –– $122 billion –– than they had in either of the previous two years. A big chunk of that is because wealthy people were rushing to beat the December 2012 deadline that Congress had set in December 2010 when it gave a tax break to those gifting up to $5 million, reports Bloomberg.

The total amount of nontaxable gifts is expected to be even higher when data is collected from tax returns filed in 2013.

Previously the limit for the tax break was $1 million. “The lifetime exclusion applies on top of an annual gift-tax exclusion, which is now $14,000,” Bloomberg says.

Bloomberg also notes that this tax break doesn’t benefit a whole lot of people: “Most of the money — $84 billion — came in the form of gifts exceeding $1 million, and those were made by fewer than 30,000 people, according to the IRS.”

Congress extended the tax break in January 2013 and tied it to inflation. This year, the amount is $5.34 million.

These likely aren’t gifts to charity but rather a transfer of assets to family members so the wealthy can reduce taxes on their estates. Explains CBS MoneyWatch, “The practical application of this is that individuals can make gifts during life or transfers at death of up to this new higher limit and pay no federal estate tax.”

It’s not the only way the wealth avoid paying taxes. This Bloomberg article describes another popular method called the Walton grantor retained annuity trust, or GRAT. Read it, and you’ll end up scratching your head.

Stacy Johnson

It's not the usual blah, blah, blah

I know... every site you visit wants you to subscribe to their newsletter. But our news and advice is actually worth reading! For 25 years, I've been making people richer without making their eyes glaze over. You'll be glad you did. I guarantee it!

💰🗣📰

Read Next: How the Trump Tax Plan Will Affect You

Check Out Our Hottest Deals!

We're always adding new deals and coupons that'll save you big bucks. See the deals to the right and hundreds more in our Deals section.

Click here to explore 1,821 more deals!