January 2022 — 

The MLO Minute: By Kelly Hayes, Esq. — 

The IRS recently issued the 2022 inflation adjustments for various tax provisions, including increased exemption amounts for the estate, gift and generation skipping transfer taxes and an increase to the annual exclusion amount for gifts made in the 2022 calendar year.

 

The lifetime estate, gift and generation skipping transfer tax exclusion amount increased to 12.6 million dollars per individual (up from 11.7 million in 2021).  A married couple can utilize up to 24.12 million dollars of exemption before incurring any tax.

 

The annual exclusion for gifts increased to $16,000.00 for gifts made in the 2022 calendar year.  Only gifts made to individuals above the annual exclusion amount require the filing of a gift tax return.  Annual gifts to an individual in excess of the exclusion amount will reduce your lifetime estate, gift and generation skipping transfer tax exemption amount.

Other inflation adjustments include:

 

Increases to the standard deduction:

• The standard deduction for married filing jointly increased to $25,900;
• The standard deduction for single filers increased to $12,950; and
• The standard deduction for head of household increased to $19,400.

 

An increase of $1000 increase to the contribution limit for Employees participating in 401ks, most 457 plans and the federal government’s Thrift Savings Account.  The 2022 annual contribution limit is $20,500.

 

For more information on all 2022 inflation adjustments see Rev. Proc. 2021-45 or click the following link:

https://www.irs.gov/newsroom/irs-provides-tax-inflation-adjustments-for-tax-year-2022