How The Gift Tax Works

Each year millions of Americans give a gift to other individuals that they know. Gifts can be considered anything from a new vehicle, to a trip, to a piece of land. A gift tax is a tax that is imposed when an individual gives away a certain amount of gifts that are considered valuable.

According the Internal Revenue Service (IRS), an individual who gives a gift or a combination of gifts to one person that is valued at over eleven thousand dollars must pay a gift tax. The Internal Revenue Service (IRS) does not require that the individual who received the gift pays the gift tax. The only individual who is responsible for reporting and paying the gift tax is the person who gave the gift away. A gift is when something is given away at no cost. The Internal Revenue Service (IRS) defines a gift as something that is given away without receiving anything of similar value in return. Gifts that are recognized by the government include property and money.

There are a number of exceptions to the gift tax imposed by the Internal Revenue Service (IRS). Gifts that are given to a spouse are not considered taxable. Another gift tax exclusion includes gifts that are used for education or medical expenses. This gift tax is often applied when a close family friend or family relative pays a portion of the college tuition expenses or medical expenses of someone they know. Gifts that are given to a charity are also not considered taxable. Individuals can donate their land, their vehicle, or money to an established charity and it will not be considered taxable. http:www.taxhelpdirectory.comtaxstratagies.

Individuals who give a taxable gift that exceed eleven thousand dollars are required to file a Form 709: United States Gift (and Generation-Skipping Transfer Tax Return). The Form 709 can be obtained by contacting the Internal Revenue Service (IRS) or by printing the form off of the Internet. It is also possible to obtain an online form by visiting the website of the Internal Revenue Service (IRS) at http:www.irs.gov. This form comes in a PDF format that allows individuals to enter in their information using the computer, and they can print off the completed forms to be mailed to the Internal Revenue Service (IRS).

In addition to the eleven thousand dollars a year gift tax restriction, individuals are also subject to a lifetime gift tax limit. That lifetime limit is one million dollars. Individuals who exceed one millions dollars in gifts in any number of years are required to start paying taxes on any more gifts that are given in the future. This means that even if an individual gives a gift that is less than eleven thousand dollars, the next year they are still required to pay a gift tax because they exceeded their lifetime gift tax allowance.

Giving another individual or charity a gift of money or property is a great way to reduce the likelihood of having to pay an estate tax later on in life. In addition to offering a number of tax benefits, a gift also allows individuals to give back to their children, family, friends, or community.

Gray Rollins is a featured writer for the Tax Help Directory. To learn more about the gift tax, visit http:www.taxhelpdirectory.commorehelpgifttax and for more answers to tax questions, visit http:www.taxhelpdirectory.commorehelptaxquestion.

Taxation in the News

When taxes attack: Can your business handle tax prep, or is it time to outsource?
The company is being sued by the state for failing to pay unemployment insurance taxes, or is being audited for failure to remit sales taxes or payroll taxes. 'A mistake we see with the sales tax is the business collects the money but it never gets

Big medical bills may add up to qualified tax breaks
(Detroit news photo illustration / Photos from isto) Taxpayers swamped by big medical bills in 2011 can get some relief when they file income tax forms this spring thanks to an overlooked deduction that is hard to reach in a typical year. The IRS lets

Feds targeting tax return fraud
Maybe you had a lapse of memory but most likely you have become the latest victim of tax fraud. The Internal Revenue Service and the Justice Department have been cracking down on suspected identity theft perpetrators to curb the growing issue of refund

China bars airlines from EU tax plan
Chinese airlines had previously said they would not pay the EU carbon tax, but the formal prohibition by the State Council, or cabinet, pits Beijing in direct opposition to Brussels. The announcement, published on Monday by Xinhua, the official news

Tax tips for February
Folks who have been victims of tax identity theft should have gotten a special Identity Protection PIN (personal identification number) by now, according to David Mellem, an enrolled agent in Green Bay, Wis. Julianne Breitbeil, an IRS spokeswoman,

EU Transactions Tax Will Hit Hardest in London, ITEM Club Says
6 (Bloomberg) -- A proposed European tax on financial transactions may cost British-based companies as much as 22 billion euros ($29 billion) a year and cause 4500 job losses whether the UK agrees to it or not, according to Ernst & Young LLP's ITEM

A Salve for a Taxing Moment: The Vodafone Ins...
The two judges did not think that Vodafone's purchase of Hutch's business was done in a manner to avoid taxes. The two judges also said that the shares that gave Vodafone control over Hutch's telecom business in India were registered outside the

Taxes

What is tax?

A tax is a financial charge or other levy imposed on an individual or a legal entity by a state or a functional equivalent of a state (for example, secessionist movements or revolutionary movements). Taxes could also be imposed by a subnational entity. Taxes consist of direct tax or indirect tax, and may be paid in money or as unpaid labour

Interesting articles

Your Affiliate Business and Taxes

IRS Holding 2 Billion In Unclaimed Tax Refunds

Taxes And The IRS Are You Paying Too Much

IRS Debt Help 5 Options To Getting Rid Of Tax Debt

Seven Key Tax Deductions for the Self Employed

Implications of Income Tax Charge on Estate Planning

What Are the Ultimate Home-Based Business Tax Advantages

Innocent Spouses - Relief from Taxes

Tax Plaza

The Tax system explained!