ANSWERS: 1
  • The IRS defines a gift as property given by one individual to another while receiving less than its value, or nothing, in return. A gift can be money, real estate or other items of value. Gift tax is the tax attached to high-value gifts.

    Limits

    A person can give a gift valued at $13,000 to an individual before gift tax is imposed. This amount is accurate as of 2009; the IRS increases this limit regularly.

    Spouse

    Each spouse is entitled to a gift tax exclusion. A married couple can gift up to $26,000 to an individual before tax is attached.

    Payment

    Any gift tax due is the responsibility of the gift giver. The giver is allowed an exclusion for each recipient. A gift recipient is eligible to receive a gift of any amount with no gift tax consequence, however, he may volunteer to pay the tax.

    Exclusions

    Tuition and medical expenses are not considered gifts. Transfers of property to a spouse, political parties or charities are also excluded.

    Cautions

    An item sold for less than its value or a loan with no or low interest is also considered a gift and must be reported if over the exclusion limit.

    Source:

    IRS Publication 950

    More Information:

    IRS Gift Tax FAQ

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