This lifetime exemption is also indexed for inflation and can change annually.
However, if the donor does not pay the gift tax, the donee may have to a giftful heart magnets pay the tax instead.
The gift tax prevents this.
Married Couples Can Give Twice As Much.You do not have to pay tax on gifts that are less than the annual exclusion limit, which generally changes every year.As their clients jetted off to ski chalets and beachfront properties, lawyers left to do the paperwork felt like Cinderella.But there's a strategic reason for filing on time especially this year.To come within the annual exclusion, a gift must be a present interest, meaning that the recipient can use the gift immediately.
This means that the tax burden for a promotional gift falls on the recipient (because it increases their wealth) and is not eligible for the annual gift tax exclusion.
Read: Federal Education Tax Breaks for Tuition and Fees.
If you make one or more transfers of cash or property to anyone during the course of the tax year, you might have to file.
The current law allows individuals to give away up.34 million over their lifetime without having to pay gift or estate taxes.
Remember, the whole idea behind the gift tax is to prevent wealthy individuals from giving their property away tax-free before death to avoid estate taxation after their deaths.There Are Also Educational and Medical Exclusions.To cap it off, on Jan.Read: How to Determine Your Filing Status.(Here too, they must file a gift-tax return and consent to gift-split.) But keep what time is the lotto millionaire raffle drawing in mind that this reduces the amount available to each of them to make tax-free transfers at death to someone other than each other-for example to children.Gift-splitting is a concept often referred to as "legal fiction".The Internal Revenue Code also provides for a lifetime exemption from gift taxes.Nikole Mock / EyeEm / Getty Images.Tax pros estimate that there are more than twice as many people in this category for the current filing season (covering 2012) than for the previous one.