A unified estate-and-gift tax credit is a tax credit that directly reduces a person’s total tax liability by the same amount. It is applied against the federal unified transfer tax and is also known as the unified credit or applicable exclusion credit. It should be noted that this type of tax credit differs from a deduction, which only lowers a person’s taxable income.
The unified estate-and-gift tax credit is a tax credit that is applied against the federal unified transfer tax. Unlike a deduction from gross income, this credit is subtracted directly from one’s total tax liability, dollar for dollar. For instance, if someone owes $10,000 in federal estate and gift taxes and has a unified estate-and-gift tax credit of $5,000, they will only need to pay $5,000 in taxes. Another example of a tax credit is the child- and dependent-care tax credit, which is available to full-time employed individuals who maintain a household for a dependent child or a disabled spouse or dependent. This credit can help offset childcare expenses. The earned-income credit is another type of tax credit accessible to low-income workers with dependent children. It is refundable, meaning that if the credit exceeds the total tax liability, the taxpayer will receive a refund for the difference. Overall, tax credits can reduce the amount of taxes owed and provide financial relief for specific expenses or situations.
The unified estate-and-gift tax credit is a federal tax credit that allows individuals to transfer a certain amount of assets to their heirs without incurring estate or gift taxes.
As of 2021, the unified estate-and-gift tax credit is $11.7 million per individual, or $23.4 million for married couples.
Yes, the unified estate-and-gift tax credit can be used for both lifetime gifts and assets passed on after death.
If you exceed the unified estate-and-gift tax credit limit, you will be subject to estate or gift taxes on the excess amount.
Yes, the unified estate-and-gift tax credit is portable between spouses, meaning that a surviving spouse can use any unused portion of their deceased spouse’s credit.
There are no restrictions on the types of assets that can be transferred using the unified estate-and-gift tax credit, as long as they are considered part of the individual’s estate.
Yes, the unified estate-and-gift tax credit can be used for charitable gifts, and these gifts may also qualify for a charitable deduction.
The unified estate-and-gift tax credit is subject to change based on legislation and may be adjusted in the future.
To claim the unified estate-and-gift tax credit, you will need to file a federal estate tax return (Form 706) for assets passed on after death, or a gift tax return (Form 709) for lifetime gifts.
There are special rules for transferring assets to non-citizen spouses using the unified estate-and-gift tax credit, so it’s important to consult with a tax professional or attorney for guidance in these situations.
This site contains general legal information but does not constitute professional legal advice for your particular situation. Persuing this glossary does not create an attorney-client or legal adviser relationship. If you have specific questions, please consult a qualified attorney licensed in your jurisdiction.
This glossary post was last updated: 17th April 2024.
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