![]() ![]() If a person waives their right to receive pension payments to another person, the transfer is not a gift for tax purposes. Additionally, a payment made to a person providing medical care to another person is not taxable. First, a donor is not required to report the payment of tuition or educational expenses made directly to an educational organization. The following qualified transfers are not taxable as gifts under IRC § 2503(e) and, thus, are not required to be reported. About IRC § 2503Ĭertain exceptions apply in determining a donor’s gift tax liability. Most people do not exceed this exclusion, so few taxpayers will ever actually pay a gift tax. Importantly, the IRS allows a single taxpayer to exclude up to $11,180,000 ($22,360,000 for married couples) of total gifts during their lifetime. ![]() If the taxpayer is married, however, the exclusion doubles because each spouse can gift a person $15,000. A donor cannot avoid the reporting requirements by making several gifts to a person of less than $15,000 when the total gift amounts aggregate to over $15,000 in a tax year. In determining the now-$15,000 thresholds, the IRS looks to the total gifts made over the course of the year. For 2018, the IRS increased the gift tax exclusion to $15,000. Generally, when a gift over $15,000 is made to one person, the donor is required to file a Form 709, United States Gift (and Generation-Skipping Tax) Tax Return. In the simplest of terms, a gift is any transfer from one individual to another, whether direct or indirect, where the donor does not receive full consideration in return for the gift they gave. You give a gift if you give property (including money) or the use of or income off of the said property without expecting or receiving anything of lesser value in exchange. Regardless of if the donor intended the transfer to be a gift or not, the tax will still be applied as long as the transfer occurred. Whenever an individual gives someone else property without receiving anything else in return or something of much lesser value, this is considered a gift, and a gift tax will be placed. The donor, not the recipient (“donee”), is generally liable for any resulting gift taxes associated with the gift. In certain situations, the IRS requires a donor to report a gift and file a gift tax return. But the giver (“donor”) needs to be aware that giving a gift may trigger tax-reporting requirements. One of the greatest feelings in the world is to give another person a gift. ![]()
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