Frequently Asked Questions on Gift Taxes

Who pays the gift tax?
The donor is generally responsible for paying the gift tax.

What is considered a gift?
Any transfer to an individual, either directly or indirectly, where full consideration (measured in money or money's worth) is not received in return is considered as gift.

What can be excluded from gifts?
The general rule is that any gift is a taxable gift. However, there are many exceptions to this rule. Generally, the following gifts are not taxable gifts.
1. Gifts that are not more than the annual exclusion for the calendar year.
2. Tuition or medical expenses you pay for someone (the educational and medical exclusions).
3. Gifts to your spouse.
4. Gifts to a political organization for its use.

May I deduct gifts on my income tax return?
Making a gift or leaving your estate to your heirs does not ordinarily affect your federal income tax. You cannot deduct the value of gifts you make (other than gifts that are deductible charitable contributions).

How many annual exclusions are available?
The annual exclusion applies to gifts to each donee. The annual exclusion for 2014, 2015, and 2016 is $14,000.

What if my spouse and I want to give away property that we own together?
You are each entitled to the annual exclusion amount on the gift. Together, you can give $28,000 to each donee (2014, 2015, and 2016).

If you need any more information regarding the above topic, contact me at 630-663-1500.