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Simple English definitions for legal terms
gift-tax exclusion
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A quick definition of gift-tax exclusion:
Gift-tax exclusion refers to the amount of money that can be given as a gift without being subject to taxes. Currently, this amount is up to $10,000 per year. The purpose of this exclusion is to make it easier for people to give gifts without having to worry about taxes, and to help with estate planning. Other types of exclusions exist in insurance policies, which exclude certain events or conditions from coverage. These can include exclusions for automobile use, design defects, and pollution.A more thorough explanation:
Definition: The amount of money that can be given as a gift without being subject to gift tax. Currently, the annual exclusion is up to $15,000 per person.
Example: If you give your friend $10,000 as a gift, you do not have to pay gift tax on that amount because it falls under the annual exclusion limit.
This definition explains that the gift-tax exclusion is the amount of money that can be given as a gift without being subject to gift tax. The example provided illustrates how the annual exclusion works in practice. It shows that if you give someone a gift that falls under the annual exclusion limit, you do not have to pay gift tax on that amount.