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Local Law Firms Home > Taxation Tax Law Overview > Gift Tax The gift tax is a federal tax imposed on the person making the gift. Assuming the intent here is to keep the tax liability to nil or as low as possible, there are two separate issues to be considered. One is regarding the annual exemptions on gift amounts and the other is the "once-in-a-lifetime" unified credit exemption on estate taxes. Proper estate planning and judicious use of both exemptions can reduce the tax burden down to a minimum. Do you have additional legal questions regarding gift tax laws? Our tax lawyers can help! Contact a local taxation law attorney today for more information. Listed below are the gift tax issues to be considered and possible solutions:
As of 2012, the unified credit for gift tax or estate tax is limited to transfers of $5 million, with a tax rate of 35 percent for gift amounts exceeding this amount. In 2013, the law changes to $1 million and 55 percent. You can also make annual gifts of up to $13,000 ($26,000 for married couples) each to as many people as you want without having to pay any gift tax. Apart from this, gifts to a spouse are not taxable, regardless of the amount. You can make unlimited gifts to others without being taxed if the amount goes towards education or medical expenses and is paid directly to the institution instead of the beneficiary. Transfer of assets to irrevocable trusts keeps it out of the estate and prevents imposition of the gift tax.
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