W. Edward Newton Jr., CPA, CFP
13850 Ballantyne Corporate Place, Suite 500 | Charlotte, NC 28277 |
8 Tips to
If you gave money or property to
someone as a gift, you might owe federal gift tax.
Many gifts are not subject to
the gift tax, but there are exceptions. Here are eight tips
you can use to figure out whether your gift is taxable.
Most gifts are not subject to the gift tax. For
example, there is usually no tax if you make a gift to your
spouse or to a charity. If you make a gift to someone else,
the gift tax usually does not apply until the value of the
gifts you give that person exceeds the annual exclusion for
the year. For 2018 the annual exclusion is $15,000 (up from
$14,000 in 2017).
Gift tax returns do not need to be filed unless you
give someone, other than your spouse, money or property
worth more than the annual exclusion for that year.
Generally, the person who receives your gift will not
have to pay any federal gift tax because of it. Also, that
person will not have to pay income tax on the value of the
Making a gift does not ordinarily affect your federal
income tax. You cannot deduct the value of gifts you make
(other than deductible charitable contributions).
The general rule is that any gift is a taxable gift.
However, there are many exceptions
to this rule. The following gifts are not taxable gifts:
- Gifts that are do not exceed the
annual exclusion for the calendar
- Tuition or medical expenses you
pay directly to a medical or educational institution for
- Gifts to your spouse,
- Gifts to a political organization
for its use, and
- Gifts to charities.
You and your spouse can make a gift up to $30,000 to a
third party without making a taxable gift. The gift can be
considered as made one-half by you and one-half by your
If you split a gift you made,
you must file a gift tax return to show that you and your
spouse agree to use gift splitting. You must file a Form 709,
United States Gift (and Generation-Skipping Transfer) Tax
Return, even if half of the split gift is less than the annual
You must file a gift tax return on Form 709 if any
of the following apply:
- You gave gifts to at least one person (other than your
spouse) that are more than the annual exclusion for the year.
- You and your spouse are splitting a gift.
- You gave someone (other than your spouse) a gift of a future
interest that he or she cannot actually possess, enjoy, or
receive income from until some time in the future.
- You gave your spouse an interest in property that will
terminate due to a future event.
You do not have to file a gift tax return to report
gifts to political organizations and gifts made by paying
someone's tuition or medical expenses.
These are good tips & guidelines to follow regarding GIFTS.
However understanding and applying these GIFT rules can be
confusing. If you need help or have a
question, as always please contact us here at the office at
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Certified Public Accountant