2016 inflation adjustments announced

The IRS has issued its year-end update on adjustments to certain dollar limits for 2016.

• The annual exclusion remains at $14,000. This is the maximum amount that one person can give to another person in one year without having to file a gift tax return. For gifts above that amount, a return must be filed but no gift tax is owed so long as the total reportable gifts by one person over his or her lifetime is less than the gift tax exemption amount.
• The estate tax, gift tax, and generation-skipping exemption amounts are increased to $5.45 million for persons dying in 2016.