Gift Tax
What does Gift Tax mean?
Gift tax is a tax assessed on the giving of money or other assets of value to another individual. The purpose of the gift tax is to ensure that an individual does not avoid estate tax by simply giving away all of their assets before they die.
Gift tax is assessed when a gift of more than $13,000 is given to an individual in a single tax year. Gift tax is not assessed when more than $13,000 is given away, so long as the gift is spread across multiple individuals such than no one person receives more than $13,000 in gifts.
For example, if a person gives a friend a gift valued at $15,000 in a single tax year, the person giving away the gift will be taxed on $2,000, the amount of the gift above the $13,000 threshold. If the person gives 10 individuals $13,000 gifts each in a single tax year for a total of $130,000 in gifts, the person will not be taxed on any of the gifts, because no single gift to an individual exceeds the $13,000 threshold in a single tax year. There is no tax implication to the recipient of the gift, regardless of the value of the gift or if it exceeds the $13,000 threshold. The liability of a gift tax lies solely with the giver of the gift.
The $13,000 threshold resets each year. Therefore, a person can give $13,000 to someone in one tax year and then an additional $13,000 in gifts to the same person in the next tax year and still have no tax obligation on the gifts.
Lawyers near
Term of the Day
Extension Request
An extension request refers to a request by an applicant to the United States Patent and Trademark Office for additional time to complete the Statement of Use for the registration of a trademark.
Category: Trademarks