- Uncle PennybagsLv 71 decade agoFavorite Answer
In the US, you are allowed to give people a certain amount of money every year. Anything over that amount will be subject to a gift tax.
I think the current limit is you are allowed to give up to $12,000 per person, to as many people as you want, without incurring a gift tax.
- LaughingLv 41 decade ago
A gift tax is a transfer tax imposed on the value of certain gifts.
In the United States the gift tax is imposed on the gratuitous transfer of monetary and non-monetary property, and is generally paid by the donor. In the United States, the gift tax is governed by Chapter 12, Subtitle B of the Internal Revenue Code. The tax is imposed by section 2501 of the Code.
The treatment of a gift for purposes of the U.S. gift tax (the transfer tax) should not be confused with the treatment of gifts for other tax purposes. For example, for U.S. income tax purposes most gifts are excluded (under Internal Revenue Code section 102) from the gross income of the recipient, and thus are not taxed as income.
Generally, if an interest in property is transferred during the donor's lifetime inter vivos then the gift or transfer would not be subject to the estate tax. In 1976, Congress unified the gift and estate taxes so that donors close to death could not circumvent the estate tax by gifting shortly before death. Even so, the tax on gifts made before death is tax exclusive whereas testamentary gifting is tax inclusive thereby making inter vivos gift less tax burdensome. Exceptions include certain gifts made within the three year window before death and gifts in which the donor retains an interest like gifts of remainder interests that are not either qualified remainder trusts or charitable remainder trusts. The remainder interest gift tax rules apply the gift tax on the entire value of the trust by assigning a zero value to the interest retained by the donor.Source(s): http://en.wikipedia.org/wiki/Gift_tax
- STEVEN FLv 71 decade ago
Gift tax is a tax on large gifts and is paid by the donor. currently gifts up to $12,000 per donor per recipient are not required to be reported to the Federal government. Gifts above that amount require a gift tax return but do not necessarily result in gift taxes being paid. A $345,800 'unified credit' eliminates the tax on the first $1,000,000 of reportable gifts over the donor's lifetime.
- Bostonian In MOLv 71 decade ago
A tax on gifts. It's paid by the giver of the gift. For small gifts like typical birthday presents you don't need to worry. But if you're thinking about a really large gift, consult with a tax pro first -- a CPA or tax attorney.
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- 1 decade ago
Laissez-Faire Guy answer is correct, and it is a maximum of $12,000 in 2006. One important point.....the person giving the gift is responsible for reporting it to IRS if over $12,000....not the recipient. The recipient doesn't have to report it at all. The burden is on the giver, and it is the giver that has to pay any gift taxes if giving more than $12,000
- 1 decade ago
The gift tax is a federal tax on gifts given over $11,000 ($22,000) if given by a married couple. The tax is imposed on the beneficiary like regular income, but at a different interest rate