Gift Tax
There is no dollar limit on the amount that one person is allowed to give to another. Gift tax rules do not prohibit a donor from making gifts in excess of the annual exclusion ($14,000 for 2014). However, if more than the annual exclusion is given to any one recipient, the amount over the annual exclusion is considered a “taxable gift.” Consequences of making taxable gifts:
- Donor is required to file a gift tax return (Form 709) for the year.
- Taxable gifts reduce the donor’s $5,340,000 (2014) lifetime gift tax exclusion.
- Gift tax is only paid once the exclusion is exhausted.
- Taxable gifts are added to the donor’s taxable estate at death.
Donors with small estates can make gifts over the annual exclusion and pay no gift or estate tax.
Read entire article here on Gift Tax
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