Question

what is a taxable gift

Answer 1

A gift is any transfer to an individual, either directly or indirectly, where full consideration (measured in money or money's worth) is not received in return.

The donor is generally responsible for paying the gift tax. Under special arrangements the donee may agree to pay the tax instead

Certain gifts are subject to tax, including cash gifts as well as property. If a gift is taxable, it may be subject to gift tax rates of up to 40%. The general rule is that all gifts are taxable, but the IRS allows a $15,000 annual exclusion amount when it comes to taxable gifts. In other words, if a gift of money or property is valued at $15,000 or less, it does not need to be reported to the IRS and no gift tax will need to be paid.

In a nutshell, the following gifts are exempt from gift tax:

• Gifts that are not more than the annual exclusion for the calendar year.
• Charitable gifts
• Gifts to your spouse.
• Educational gifts, provided that they are made directly to a qualified educational institution only, not to things like books and school supplies
• Medical expenses paid directly to the person providing the care