Individuals can make gifts to anyone they choose, including their children, in amounts up to the Internal Revenue Services' annual exclusion without being at risk of paying gift taxes, according to Intuit. For tax year 2014, the annual exclusion is $14,000. Recipients do not pay income tax on the gifts they receive. If the gifts produce income after receipt, the income is taxable for the recipient.Continue Reading
On top of the annual exclusions from gift taxes, a individual taxpayer can make gifts of as much as $5.43 million over the course of his lifetime without incurring gift taxes as of tax year 2015, notes Intuit. Taxpayers who make gifts in excess the annual exclusion have to keep track of these overages, according to Forbes.
When a gift exceeds the annual exclusion amount, the difference between the gift amount and the annual exclusion is subject to gift tax and deducted from the estate tax exclusion at a taxpayer's death, states Forbes. Taxes on estates can be as high as 40 percent as of 2014.
Members of married couples are each able to give away as much as the annual exclusion each year to each intended recipient for a total of $28,000 in 2014, according to the Internal Revenue Service. Gifts do not change the giver's income tax liability and are not tax deductible.Learn more about Taxes