The gift tax short version:
You can give up to $15,000 per year of cash or property (in 2019) to as many people as you wish without filing a gift tax return. The gift is not taxable to the recipient.
1. Gift tax, if due, is generally paid by the DONOR, not the recipient.
2. There is an annual gift exclusion in 2019 of $15,000. You can give $15,000/year to as many people as you want without having to file a gift tax return.
- This amount is adjusted each year for inflation
3. Under current law you can give away $11,400,000 during life and at death without owing any gift or estate taxes.
- Yes, that is over 11 million dollars
- Think of this as an >$11 million dollar giveaway “coupon”
- If you are married the total is >$22 million
4. The purpose of the gift tax return is to track how much you are giving away during life.
- For example, if you give someone $50,000 then you file a gift tax return and the $50,000 is subtracted from your $11+ million dollar lifetime giveaway coupon
- No tax due!
- If at some point your lifetime gifts exceed $11 million only then would there be gift tax due
- Of course the law could change in the future
5. A married couple can give $15,000/year each to as many people as they wish.
- But may need to file a gift tax return to declare they are splitting the gift.
6. If you give someone more than $15,000 in a year (or $30,000 for a married couple), then you need to file a gift tax return.
7. Payments made directly to an educational or medical institution for someone else are exempt from gift taxes; no gift tax return is required.
- However, making direct payments to a college may affect the student’s financial aid
8. Gifts to a spouse are exempt from gift taxes as long as the spouse is a US citizen.
9. Gifts to a political organization are exempt from gift taxes.