Q:
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Who pays the gift tax?
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A:
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The donor is generally responsible for paying the gift tax. Under special arrangements the donee may agree to pay the tax instead.
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Q:
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What can be excluded from gifts？
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A:
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The general rule is that any gift is a taxable gift. However, there are many exceptions to this rule. Generally, the following gifts are not taxable gifts.
1.
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Gifts that are not more than the annual exclusion for the calendar year.
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2.
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Tuition or medical expenses you pay for someone (the educational and medical exclusions).
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3.
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Gifts to your spouse (if your spouse is U.S. citizen).
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4.
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Gifts to a political organization for its use.
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5.
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Gifts to certain exempt organizations described in 501(c)(4), 501(c)(5), and 501(c).
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6.
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Gifts to charities.
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Q:
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May I deduct gifts on my income tax return?
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A:
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Making a gift or leaving your estate to your heirs does not ordinarily affect your federal income tax. You cannot deduct the value of gifts you make (other than gifts that are deductible charitable contributions).
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Q:
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How many annual exclusions are available?
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A:
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The annual exclusion applies to gifts to each donee. In other words, if you give each of your children $11,000 in 2002-2005, $12,000 in 2006-2008, $13,000 in 2009-2012 and $14,000 on or after January 1, 2013, the annual exclusion applies to each gift. The annual exclusion for 2014, 2015, 2016 and 2017 is $14,000. For 2018, 2019, and 2020, the annual exclusion is $15,000.
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Q:
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What if I sell property that has been given to me?
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A:
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The general rule is that your basis in the property is the same as the basis of the donor. For example, if you were given stock that the donor had purchased for $10 per share (and that was his/her basis), and you later sold it for $100 per share, you would pay income tax on a gain of $90 per share. (Note: The rules are different for property acquired from an estate).
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FAQ
