Business, Legal & Accounting Glossary
In the US, a tax imposed by the federal government or state on the donor of a gift when the transfer of money or property passes from one individual to another. A parent or parents making gifts to children are allowed to make transfers up to a specified amount without paying tax. In the UK there is currently no gift tax in operation although there is a potential liability for inheritance tax when gifts are made.
n. federal tax on large gifts. Gifts to members of a family may be up to $10,000 a year to each plus an additional $30,000 accumulation of gifts is allowed tax-free. Several states also impose gift taxes. As with all tax questions, professional assistance in gift tax planning is vital.
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: 28th April, 2020 | 1 Views.