There is a great deal of confusion about gifting and gift
taxes. The federal gift tax law is completely apart from the income tax law.
Neither party to a gift should include the gift information on their income tax
return. The gift is not tax-deductible by the one giving the gift, and it is
not taxable income to the one receiving the gift. But a gift tax return may
need to be filed.
So, who has to file a gift tax return? The gift tax applies
to the transfer of money or property from one individual (the donor) to another
(the donee). If a gift tax return is due, it is filed by the donor.
Certain gifts are not taxable and do not require the filing
of a gift tax return, including the following:
*Gifts in 2012 of $13,000 or less per person to any number
of people are not taxable. That limit increases to $14,000 in 2013.
*A payment for another’s tuition made directly to an
educational institute.
*A payment for medical treatment of another made directly to
the medical facility.
*Unlimited gifts made to one’s spouse (there is a dollar
limit if the spouse is not a U.S. citizen).
If you make taxable gifts, a Form 709 is due by April 15 of
the following year (the same due date as your federal income tax Form 1040).
But don’t panic, you probably won’t owe gift tax. In addition to the above
exclusions, you have a lifetime exemption -- in 2012 the exemption is
$5,120,000. This exemption is scheduled to drop to $1,000,000 in 2013 unless
Congress acts to change the law.
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