Though the rules governing this area of tax law are subject to change, as of 2014, cash gifts of up to $14,000 are not subject to federal taxes, as reported by Turbo Tax. The $14,000 figure is known as the annual exclusion limit, which is the amount up to which gifts are not taxable. There are some exemptions to this limit, though, including gifts given for the purposes of paying medical bills or educational tuition.Continue Reading
When a cash gift exceeds the annual exclusion limit, which may change, the gift giver usually is responsible for paying the tax on that amount, states the IRS. In some rare cases, the gift recipient may volunteer to pay the tax.
The IRS defines a gift as a one-sided transaction in which someone gives something without expecting anything in return. In general, all gifts are considered taxable, but that rule of thumb has some very specific exceptions. In addition to the exceptions for amounts below the exclusion limit and for medical bills and tuition, gifts from one legal spouse to another are not taxable. This includes amounts that are above the annual exclusion limit. Financial gifts to political groups are also not subject to the exclusion limit. This limit covers both cash gifts and financial gifts of property.Learn more about Taxes