Question

Do I Have to Pay Taxes on a Gift?

Answer

Generally, the answer to “do I have to pay taxes on a gift?” is this: the person receiving a gift typically does not have to pay gift tax. The giver, however, will generally file a gift tax return when the gift exceeds the annual gift tax exclusion amount, which is $15,000 per recipient for 2019. The giver may also not owe gift tax due to the basic exclusion amount.

Gift Tax Exclusions

what is the gift tax

Some monetary exchanges are not subject to the gift tax no matter their amount. Included in those exceptions are almost all monetary exchanges between a husband and a wife if both spouses are U.S. citizens, all money paid directly to an educational institution to cover tuition, or all money paid directly to a medical institution to cover medical expenses. Direct gifts made to educational and/or medical institutions can be made on behalf of any person, not just a person related to the giver.

Gift Tax Exclusion Amounts – Gifts to Multiple Parties

If you are making a gift to more than one person, the exclusion amount will apply to each person individually. For example, if you have four children and you give $15,000 to each one in 2019, your gifts totaling $60,000 ($15,000 x 4) will not be subject to gift taxes. Additionally, if you are married, you can split all gifts made to others during the year between you and your spouse. That means you could give $15,000 and your spouse could give another $15,000 to each child without exceeding the annual exclusion. However, spouses who elect to split gifts typically must file gift tax returns. There are two exceptions where the donor spouse only has to file a gift tax return. See page 6 of Form 709 instructions for more information.

Lifetime Gift Tax Exclusion

In addition to the annual gift tax exclusion, gift givers should be aware of the basic exclusion amount. As the name implies, this amount refers to the amount an individual can give during their entire lifetime. Here’s how it works: If, during any year, your gift is above the annual threshold, you must report it as a taxable gift on IRS Form 709. In that case, you would apply your applicable credit to determine if you owed any gift tax. This amount is equal to the tax on the basic exclusion amount. This can reduce or eliminate both gift and estate tax.

Gift Tax Questions

Have additional questions about taxes on gift taxes or need help filing your return? Our tax pros can help you no matter your need. They speak the tricky language of taxes and are committed to helping you better understand your taxes.

Make an appointment with one of our tax pros today.

Related Topics

Related Resources

Giving ‘Til it Hurts: The Annual Gift Tax Exclusion

If you are giving large gifts this year, it's important to know the IRS rules surrounding gift taxes. Learn more about the gift tax exclusion at H&R Block.

How to Calculate Capital Gains Tax

The first step in how to calculate long-term capital gains tax is generally to find the difference between what you paid for your property and how much you sold it for —adjusting for commissions or fees. Depending on your income level, your capital gain will be taxed federally at either 0%, 15% or 20%.

How Much Do You Have To Make To File Taxes?

The minimum income amount depends on your filing status and age. In 2017 for example, the minimum for single filing status if under age 65 is $10,400. If your income is below that threshold, you generally do not need to file a federal tax return. Review our full list for other filing statuses and ages.

Reporting Child Care Income

Learn more about reporting child care income with help from the tax experts at H&R Block.