Tax Guidelines About Gifting
Whenever a significant amount of money or property changes hands, the IRS wants its cut. If you have recently given someone a large gift or are thinking about it, know that under the gift tax, you may be expected to pay taxes on that gift (unless the recipient does.) However, there are some exceptions.
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Non-taxable Gifts
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Typically, gifts that are less than the annual exclusion amount, tuition or medical expenses that you paid for someone, spousal gifts, and gifts to a political organization and/or qualifying charity may qualify as being non-taxable.
Annual Exclusions
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For 2009, the annual exclusion rate was $13,000 per person. Both you and your spouse can give this amount. Refer to Publication 950 for current exclusion rates.
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Generation-Skipping Transfer (GST) Tax
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If the gifts are given to someone that is two or more generations below you (your grandchild, for example,) the GST tax may apply.
Filing a Gift Tax Return
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File a gift tax return on a Form 709.
Considerations
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When in doubt about your taxes, consult a tax professional or contact the IRS.
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