Gift Tax

Gift taxes have been changing every year since 2008. The annual exclusion is $13,000 for gift donors and $26,000 per couple for each gift. That means the exclusion can exceed $26,000 per year for a married couple.

Financial Definition

A gift is defined as an exchange or property between a donor and recipient, without full consideration. In other words, the recipient can pay a portion of the fair market value of the property. The recipient does not have to pay taxes and the property may have an adjustable basis depending on if the property has a capital gain or loss.

Present vs. Future Gift

In order for the annual exclusion to apply, the gift must be of a present interest, rather than a future interest gift. A future interest gift is one which is limited in a way to a future date. A future gift will not be allowed the gift exclusion unless the $13,000, or less, gift to trust passes the Crummey rule which allows grantees the right to withdraw.