Finance Quick Answers
What are the tax laws about giving gifts?
If you gave any one person gifts valued at more than
$12,000 in 2008, it is necessary to report the total
gift to the Internal Revenue Service. You may even have
to pay tax on the gift.
The person who receives your gift does not have to
report the gift to the IRS or pay gift or income tax on
its value.
You make a gift when you give property, including
money, or the use or income from property, without
expecting to receive something of equal value in return.
If you sell something at less than its value or make an
interest-free or reduced-interest loan, you may be
making a gift.
There are some exceptions to the tax rules on gifts.
The following gifts do not count against the annual
limit:
- Tuition or medical expenses that you pay directly to an educational or medical institution or health care provider for someone's benefit
- Gifts to your spouse
- Gifts to a political organization for its use
- Gifts to charities
If you are married, both you and your spouse can give
separate gifts of up to the annual limit to the same
person without making a taxable gift. That means that
both you and your spouse could each have given up to
$12,000 to the same person in 2008 without being liable
for gift taxes.
For more information, get the IRS Publication 950,
"Introduction to Estate and Gift Taxes," IRS Form 709,
"United States Gift Tax Return," and "Instructions for
Form 709." They are available at the IRS Web site at
www.irs.gov under
"Forms and Publications" or by calling toll free
1-800-TAX-FORM (1-800-829-3676).
Source: IRS TAX TIP 2004-38
Reviewed by Brenda Procter, M.S., State Specialist & Instructor, Personal Financial Planning, University of Missouri Extension
Can't Find Your Question Here? Try Searching Our Quick Answer Knowledge Base
Last update: Monday, November 17, 2008
 |
Site Administrator: |
|
|
|
