IRS TAX HELP: 5 Common Questions Taxpayers have about the Gift Tax
1. WHAT IS THE GIFT TAX?
Many taxpayers may not be aware that when you gift money or property to someone, that gift may be subject to the Gift Tax.
The Gift Tax, is a tax on the transfer of property and or money by one individual to another while receiving nothing, or less than the full value in return. Keep in mind, you must always take into consideration, that if you sell something at less than it’s full value or if you make an interest-free or reduced interest loan, this can also be considered a “gift”. The good news for most tax payers, is that you are allowed to gift up to over $5 million dollars tax-free within your lifetime.
2. WHO PAYS THE GIFT TAX?
The person giving away the property is responsible for paying the Gift Tax to the IRS. However, arrangements can be made so that the individual receiving the property pays the tax. The IRS recommends consulting a Tax Professional if you are considering this type of arrangement. If you have questions or need help regarding a gift tax, contact TRUE TAX RESOLUTIONS INC., by calling 773–609–4TAX or visiting http://truetaxresolutions.com.
3. WHAT IS CONSIDERED A GIFT?
The IRS may consider any transfer of property, where full consideration (measured in money) is not received in return.
4. WHAT CAN BE EXCLUDED FROM GIFTS?
The general rule is that any gift may be considered a taxable gift. However, the IRS does allow for some exceptions.
Here are some examples of those exceptions:
a) Gifts that are not more than the annual exclusion of $14,000 may be excluded.
b) Tuition or Medical expenses that you pay for someone else.
c) Gifts to your Spouse.
d) Gifts to political organizations
e) The value of gifts donated to qualifying charities.
5. MAY I DEDUCT GIFTS ON MY FEDERAL INCOME TAX RETURN?
Making a gift or leaving your estate to your heirs, usually does not affect your Federal Income Tax. Therefore you cannot deduct the value of the gifts you give, unless they were given to a qualifying charity.
If you have questions or need help regarding a gift tax, contact TRUE TAX RESOLUTIONS INC., by calling 773–609–4TAX or visiting http://truetaxresolutions.com.
Authored by:
Harold Pena-Hayes, E.A.
President of True Tax Resolutions Inc.
True Tax Resolutions is tax service dedicated to providing the highest caliber of tax help to the business and individual taxpayers of America. Whether you owe Federal Tax or the State Tax we can help you. We help businesses and Individuals with tax filing, including delinquent tax returns. Additionally, we help clients with tax refunds, tax extension, tax debt settlement, payment plans, wage garnishment removal, levy lifts, and obtaining hardship status. Call 773–609–4TAX for a free no obligation consultation with a licensed professional.
