Gifts: When are they taxable?

If you give away money or property during your lifetime, you may be subject to the federal gift tax. Here are some gift tax facts the IRS wants you to know.

* Though the general rule is that gifts are taxable, there are many exceptions to the rule. Gifts that are not taxable include those that don’t exceed the annual exclusion amount for a given year ($13,000 for 2012), gifts to your spouse, charitable gifts, gifts to political organizations, and payments for the tuition or medical expenses of someone that you make directly to the medical or educational institution.

* You and your spouse can make annual gifts of double the exclusion amount even if just one of you owns the property being gifted. Such a split gift requires the filing of a gift tax return even if half of the split gift is less than the annual exclusion.

* Generally, the person who receives your gift is not taxed on the value of the gift. If any tax is due, you the donor are responsible for it.

* You cannot take a tax deduction for gifts you make, except for gifts to charity. To be deductible, charitable gifts must be made to IRS-approved organizations; gifts to individuals are not tax-deductible.

For more information or planning assistance on gift giving, contact our office.

Newsletter Sign-Up!

Bringing big ideas to your inbox!

* = required field

powered by MailChimp!