Intuit Academy Tax Practice Exam

The federal estate tax exclusion amount per individual for the year 2022 is $12.06 million. This amount represents the value of an individual's estate that can pass to heirs without incurring federal estate taxes. The figure is adjusted periodically for inflation, and in 2022, the exclusion was set at this specific amount.

This exclusion is significant because it determines the threshold below which estates are not subject to federal estate taxes. If an individual's estate is valued below this exclusion limit, no federal estate tax will be owed. Conversely, estates exceeding this amount are subject to taxes at rates that can be quite high.

The exclusion is an essential aspect of tax planning for individuals and families, as it affects how much wealth can be transferred without tax liability. It is important for estate planning strategies, as individuals can structure their estate to maximize the benefits of the exclusion. This knowledge also helps individuals and financial advisors make informed decisions regarding gifts and trusts.