Do I have to pay gift tax when someone gives me

money?

Gift Tax:

Surprise!Mom and Dad just gave you a nice BIG check!

Now.Do you need to worry about paying tax on

your gift?

The IRS won’t take notice if you receive a gift of $14,000 or

less in a calendar year (2013).

The effective annual limit from one couple to another couple before the IRS

takes notice is $56,000.

For purposes of the gift tax,it’s not a gift if:

One: It’s given to a husband or wife who is a U.S. citizen. Two: It’s paid directly to an educational or medical institution for someone’s

medical bills or tuition expenses.

Gift tax isnot an issue for most people.

The person who makes the gift files the gift tax return, if necessary, and pays any

tax.

For example:

Say someone gives you $20,000 in one year, and you and the giver are both single. The giver must file a gift tax return, showing an excess gift of $6,000 ($20,000 – $14,000 exclusion = $6,000).

If the donor does not pay the tax,the IRS may collect it from you.

Each year, the amount a person gives other people over the annual exclusion

accumulates until it reaches the lifetime gift tax exclusion.

Currently, a taxpayer does not pay gift tax until they have given away over

$5.25 million in their lifetime.

For more in depth details, click to learn more at blog.taxact.com