Updated July 27, 2015
What Is Gift Tax Chicago Illinois
Gift Tax Exclusion, Gift Exemption and Gift Taxes
The donor is generally responsible for paying the gift tax. Under special arrangements the donee may agree to pay the tax instead. Please visit with your tax professional if you are considering this type of arrangement. Any transfer to an individual, either directly or indirectly, where full consideration (measured in money or money’s worth) is not received in return.
The general rule is that any gift is a taxable gift. However, there are many exceptions to this rule. Generally, the following gifts are not taxable gifts:
- 1. Gifts that are not more than the annual exclusion for the calendar year.
- 2. Tuition or medical expenses you pay for someone (the educational and medical exclusions).
- 3. Gifts to your spouse.
- 4. Gifts to a political organization for its use.
In addition to this, gifts to qualifying charities are deductible from the value of the gift(s) made. Making a gift or leaving your estate to your heirs does not ordinarily affect your federal income tax.
The annual exclusion applies to gifts given to each donee. In other words, if you give each of your children $11,000 in 2002-2005, $12,000 in 2006-2008, and $13,000 on or after January 1, 2009, the annual exclusion applies to each gift. If you and your spouse want to give away property that you own jointly, you are each entitled to the annual exclusion amount on the gift. Together, you can give $22,000 to each donee (2002-2005) or $24,000 (2006-2008), $26,000 (effective on or after January 1, 2009).
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