Donors must pay a gift tax on transfers of money or property for which they do not receive full compensation, reports the Internal Revenue Service. A number of types of gifts qualify as exceptions to the tax. Donors must report taxable gifts in their federal tax returns and include appraisals and other documents that record the transfer.Continue Reading
As of 2015, donors can give each recipient gifts up to the exclusion amount of $14,000 tax-free, explains the IRS. Married couples can give away jointly owned property worth up to double the exclusion amount without paying gift taxes. Other qualifying exceptions to gift tax include gifts that donors give for medical expenses or tuition. Additionally, donors do not have to pay gift tax on gifts to spouses or political organizations, and they can deduct gifts to qualifying charities on their federal tax returns.
Donors must assess the fair market value of noncash gifts when calculating the amount of gift tax they owe, advises the IRS. Fair market value is the price a knowledgeable buyer and seller would exchange under normal market conditions. Although donors can usually handle the tax implications of small transfers by themselves, when transferring large gifts, they often hire professionals to help them handle gift tax details.Learn more about Taxes