When you die, a specific amount of your estate will receive an exemption from the estate tax. You may have reduced the amount of this exemption by making certain types of gifts. Therefore, to calculate your remaining estate tax exemption, you will need to subtract your total lifetime taxable gifts from the current estate tax exemption.
1. Determine the current estate tax exemption. As of the time of publication, the estate tax exemption is $5,000,000.
2. Determine the value of your lifetime taxable gifts. This is the total value of the gift tax paid over your lifetime. You pay the gift tax when you make a gift of more than a threshold amount to a single individual during the tax year. As of the time of publication, you would pay this tax if the gift to a single person exceeds $13,000. Therefore, if you made a single gift of $15,000, you would pay a gift tax on $2,000. The $2,000 would also count towards the value of your lifetime taxable gifts. For example, assume the total value of your lifetime taxable gifts is $500,000.
3. Subtract the value of your lifetime taxable gifts from the current estate tax exemption. Continuing the same example, $5,000,000 - $500,000 = $4,500,000. This figure represents your remaining estate tax exemption.
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