Gift Tax

If you gift money to a loved one, whether a friend or family member, you may be required to pay a gift tax to the Internal Revenue Service (IRS). However, with a bit of financial planning, you can afford to be quite generous before you must break out IRS Form 709 to report the amount and be on the line to pay extra money. What is the gift tax? Gift tax is a federal tax levied on transferring money, property, or assets from one person (the donor) to another (the donee) without expecting to receive something of equal value in return. The donor, not the recipient, pays the tax. How does the gift tax work? The gift tax applies when the value of the gifts exceeds the annual exclusion amount, which in 2025 is $19,000 per person. In the case of a married couple gifting to one donee, the exclusion is $38,000 What is considered a gift for tax purposes? A gift is a transfer of property, including real estate, stocks, money, or other assets, in which the donor receives less than fair market value in return. What are the exclusions and exemptions for gift tax? • Gifts that do not exceed the annual exclusion • Tuition or medical expenses paid directly to an educational or medical institution for someone else’s benefit • Gift to a spouse • Gift to a political organization • Gift to qualified charities What is fair market value? Fair market value is the price an asset would sell for under current market conditions, assuming that both the buyer and the seller seek the best possible price. For any other questions about Gift Taxes, we’re here to help. Call (631) 585-9698 for a free consultation to determine how we can best serve you–contact us today.