Each year you are able to give away money or property in the form of a gift. These gifts will be nontaxable as long as they are below the exclusion amount allowed.
Exclusion Amounts
You may give up to $13,000.00 to one individual or any number of people if you file as single.
If you file married, then you may gift up to $26,000.00 to one person or any number of people.
There are a few guidelines to ensure your gift is nontaxable:
The gift amount cannot exceed the exclusion amount during one calendar year.
If you have paid for someone else’s education expenses then, no matter how large the amount, this will remain nontaxable.
Your gift will remain nontaxable if you gave it to your spouse or a political organization.
You may need to file a gift tax return under certain circumstances. To file a gift tax return you will need to use Form 709.
If you have given gifts that are larger than the exclusion amount then you will be responsible for the tax on the remaining gift amount. If you are married then you will need to share the amount of that tax that is due on the gift amount.
If you are the recipient of a gift then you will not need to report this on your return as all as long as it is considered a true gift and not any type of payment. If the gift produces income such as stock or a business then you will need to pay tax on the income earned.
To learn more about gift tax exclusions, visit TurboTax Online.
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