UK Accounting Glossary
The gift tax is a US tax levied on gifts above a certain value. The donor, not the recipient, pays the gift tax. The amount of the gift tax is based on the total amount of all gifts given to an individual recipient in one year. The annual exclusion is the cutoff point below which no gift tax return must be filed. For many years the annual exclusion from the gift tax was $10,000, though this limit is now periodically adjusted upwards for inflation. Spouses can each give an amount less than or equal to the gift tax annual exclusion without concern for the gift tax. For example, if the exclusion were $11,000, a couple could each give $11,000 to their daughter, and could also each give another $11,000 to their son-in-law for a total of $44,000 in one year. The gift tax is closely related to the estate tax. Estate tax law tends to change so, questions about the gift tax and related matters should be directed to an estate attorney or CPA.
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This glossary post was last updated: 9th February 2020.