Gift Tax

It’s generally required that you file a federal gift tax return, using IRS Form 709, if you made a gift worth over $13,000 to an individual or several gifts to one individual that add up to more than $13,000. Gifts above the $13,000 annual limit are called “taxable gifts.”  If you are married, you and your spouse can jointly give away up to $26,000 per donee.

Even if you have to file Form 709, you won’t have to actually pay any gift tax unless your cumulative taxable gifts exceed the lifetime gift tax exemption.  This exemption limit is $1 million for 2010-2012. In other words, each individual is provided a special lifetime “unified credit” that can be used to offset the gift tax liability dollar for dollar.  The amount is frozen at 330,800 for 2010 which is the tax on the first $1,000,000 of lifetime transfers.  In effect, no lifetime gifts will be taxable until total taxable transfers exceed $1,000,000.