Did you know that, in some cases, if you receive a gift,
taxes may have to be paid on that gift?
There exists a tax in America known as the “gift tax,” and
it’s a tax assessed on the value of a gift given from one person to another. Of
course, if the gift comes from your spouse and your spouse is a citizen, the
gift is exempt from taxation. But, in other cases, gifts and their value may be
taxed.
Determining if a Gift is Taxable
Usually, the type of gifts that are taxed are things like
jewelry, property, or stocks.
You can determine if a gift tax applies by considering
whether or not the gift recipient pays for the full fair market value of the
property. If not, a gift tax will apply.
Likewise, think about whether or not the gift giver will one
day get the property back. If the answer is no, the gift tax applies.
Who Pays?
If a gift is indeed taxable, you may be wondering who has to
pay up when it comes to the tax.
The answer is the person giving the gift. The giver has to
pay the tax, report the gift to the IRS via a special gift tax return form, and
also file and pay state taxes if required.
If you’re thinking about giving a gift or accepting one and you have questions related to the gift tax and how it may affect you, remember that you can always seek advice from a financial professional.
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