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Federal Gift Tax Rules

Individuals contemplating giving a monetary gift have worried about federal gift tax rules. Uncertainties of who pays the federal gift tax or what the amount of money one can give before incurring the federal gift tax often lead to questions like the ones answered below by the Experts.

Using the Federal gift tax exclusion of $13,000 per person would the receiving couple with minor children who are receiving Medicaid benefits and food stamps; would these benefits be affected in any way?

If a couple who is currently on state assistance for food stamps and Medicaid were to receive a gift of $13,000 each ($26,000 total) it would disqualify them from the state assistance. The gift amount would most certainly bring their family income above the 56% of the federal poverty level for the year and that would disqualify them for those benefits. Resources cannot exceed $1,000 for food stamps. For the children to be eligible for Medicaid the family income would need to be below the federal poverty level for that year.

I live in FL. I am giving a limited tax free gift to my child. Is there a legal way I should do this?

Individuals are able to give up to $13,000 per year to a child and will not incur the federal gift tax. Gift taxes are paid by the donor of the gift and not the gift recipient. No matter what amount you choose to give your child they would not incur any tax consequences. Gifts are not considered income either. Additionally Florida does not impose a gift tax. You may give your child the gift in any form cash, check, money order, etc.

I am living separate from my spouse. My spouse is going to retire, and will receive a refund from retirement of $60,000. My spouse will give me $15,000 and $7,000 to our children. Taxes will be taken out automatically. Will we have to pay tax on this money?

Individuals that are the recipients of the monetary gifts do no pay taxes on that amount. The donor would be responsible for those federal gift taxes if applicable. The federal gift tax would not apply to your situation because there is no federal gift tax when a spouse gives money to their spouse. The gift to your children would also not carry a federal gift tax as it is below the $13,000 limit for a gift to be taxed.

If an individual gifted each of their grandchildren money of $10,000. Does this individual have to pay tax on the money they had given them?

The federal gift tax would not be imposed on gifts to anyone if those gifts are $10,000. It does not matter if the individual gave it to her niece, nephew, son, daughter, neighbor, grandchild, etc. As long as each gift falls within the “per done exclusion” amount they will not pay the federal gift tax.

I want to gift my sibling some money, it's over the $13,000 limit. Can I use my lifetime federal gift tax credit to avoid having to pay a gift tax on this?

Every individual is granted a lifetime taxable exclusion limit for granting gifts. Any amounts below the lifetime gift exclusion amount would not be subject to the federal gift tax. Individual gifts over the individual limit of gifting would still not be taxable if it does not surpass the lifetime exclusion amount. Even though you will not incur a federal gift tax on the amount that is over the individual gift amount you would be required to file a gift tax form to report your gifting.

Obtaining the correct information and knowing what the federal gift tax rules are can help when dealing with questions regarding federal taxes on gifts that you may give. Experts can help answer if the federal gift tax will apply to your situation or what the lifetime exclusion amount may be before incurring the federal gift tax. Get the answers fast and affordably by asking an Expert.

Ask a Tax Professional

Wallstreet Esq.
Wallstreet Esq., Tax Attorney
Category: General
Satisfied Customers: 572
Experience:  10 years experience
16356563
Type Your Tax Question Here...
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6 Tax Professionals are Online Now

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Tax Professionals are online & ready to help you now

Wallstreet Esq.
Tax Attorney
Satisfied Customers: 570
10 years experience
Wendy Reed
Enrolled Agent
Satisfied Customers: 3052
15+ years tax preparation and tax advice.
Mark D
Enrolled Agent
Satisfied Customers: 985
MBA, EA, Specializing in Business and Individual Tax Returns and Issues

Recent Federal Gift Tax Questions

  • As a US citizen can I receive a gift of Real Estate (approx.

    As a US citizen can I receive a gift of Real Estate (approx. 300,000 value) located in the US from a non-resident alien? Can the foreign donor of the gift use the unified credit of the gift tax exclusion and not pay a gift tax?
  • My spouse and I are going to sell my son and his spouse a 2nd

    My spouse and I are going to sell my son and his spouse a 2nd home we own. The property is valued at $260,000 +/- 5K. We have a $150,000 mortgage on the home and approximately $110,000 equity.
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  • What tax consequences would I have if my parents add me as

    What tax consequences would I have if my parents add me as a joint tenant to property they own for inheritance purposes? Doesn't the federal gift tax only apply if they pass on or would I have to be assessed that tax in the year of the transfer?
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