I have a question about gift tax exclusion. If I received a significant sum of money as a gift in the tax year, do I have to pay taxes on a gift that's monetary — Who is responsible for the tax owed?
Regarding your question: do I have to pay taxes on a gift, no, gift tax is generally not an issue for most people who are the recipients of gifts, even large monetary ones. The person who makes the gift files the gift tax return, if necessary, and pays any tax. Essentially, gifts are neither taxable nor deductible on your tax return. Also, a monetary gift has to be substantial for IRS purposes — In order for the giver of the sum to be subject to tax ramifications, the gift must be greater than the annual gift tax exclusion amount. The giver won’t pay any tax if the gift is at or below the annual gift tax exclusion — This amount is $14,000 for both 2014 and 2015. Also, some monetary exchanges are not subject to the gift tax no matter their amount. Included in those exceptions are monetary exchanges between a husband and a wife if both spouses are U.S. citizens and money paid directly to an educational or medical institution to cover tuition or medical expenses. Those direct gifts made to educational and/or medical institutions need not be made on behalf of persons to whom the giver is related for the giver to avoid tax ramifications.
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