The federal gift tax is a part of the federal Unified Gift and Estate Tax system and applies to transfers of money or property while you are still alive. However, you are exempt from the gift tax up to a certain dollar amount (in 2017, up to $14,000 given to any number of different people).
The Basics of the Gift Tax
When a person gives another person or a non-charitable organization money or property that is equal to or above the annual gift tax exclusion amount, a gift tax is imposed on the giver. In 2017, a U.S. taxpayer can give up to $14,000 to any number of different individuals without incurring the gift tax. If someone is married, the law effectively allows them to give double this amount by "gift splitting."
Other rules that apply to gift tax law include:
- Education expenses, paid directly to the educational instution, may be nontaxable if done properly.
- Gifts for medical expenses, paid directly to the provider may be nontaxable if done properly.
- Gifts given to a U.S. citizen spouse, and some gifts given to a non-U.S. citizen spouse, will be nontaxable if done properly.
If you are considering giving a gift, or you are the recipient of one, and need more information about gift tax planning, the attorneys at Vaught & Boutris LLP would be happy to speak with you.