Gift Tax

 

 

If you recently gave a gift, it’s important to know how you may be affected at tax time. By definition, the gift tax is a tax imposed on property that is transferred from one individual to another for nothing, or less than full value, in return. The gift tax is paid by the gift giver, not the receiver. The person receiving the gift does not need to claim the gift as income.

Most gifts are taxable, with the exclusion of the following gifts:

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• gifts that do not exceed $14,000

• tuition or medical expenses you pay for someone

• gifts to a spouse

• gifts to a political organization for its use

 

 

Gifts to qualifying charities are deductible from the value of the gift(s) made.

If you give a gift over $14,000, the gift tax owed will be figured on the amount over $14,000 only. Your spouse can give $14,000 or less to the same person during the same year without incurring a tax liability.

 

 

Refer to our Tax Glossary for a complete list of definitions and explanations of commonly used tax terms.