Gift Tax

IRS Definition

The gift tax is a tax on the transfer of property by one individual to another while receiving nothing, or less than full value, in return. The tax applies whether the donor intends the transfer to be a gift or not.

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Any tax year you give an individual a gift or gifts, that total more than the annual exclusion, you must file Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return. The annual exclusion for 2014, 2015, 2016 and 2017 was $14,000. For 2018, the annual exclusion is $15,000.

Gift tax is typically paid by the donor unless the recipient agrees to pay the gift tax. The gift tax rate for 2017 is between 20-40%.

If you are the recipient of the gift, you don’t have to declare the gift as income on your tax return.

Concerned about IRS gift tax? Learn how to handle an IRS audit.

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