Who pays taxes on money given as a gift?

The person making the donation files the gift tax return, if necessary, and pays any taxes. That still doesn't mean they owe gift taxes. 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. The IRS considers a gift to be money or items of value given to another person without receiving anything of value in return. A donation is not considered income for federal tax purposes. The person making the donation will file the gift tax return, if necessary, and will pay any taxes due.

That means you're likely to owe taxes on the revaluation during your lifetime, just as you would have if you sold the asset yourself. If you choose to give someone more than the annual exclusion amount in a given year, they will be required to file a gift tax return (Form 70). If you're not sure if gift tax or estate tax applies to your situation, see Publication 559, Survivors, Executors, and Administrators. They speak the complicated language of taxes and are committed to helping you better understand your taxes.

It's best to work with the assistance of a qualified tax professional to help you navigate the process. This method should be reserved for taxpayers who have no record of which tax year (s) a gift tax return was filed. Each state is a different jurisdiction and, in my opinion, it is very important for families to consult their tax advisors when considering any type of planning that involves not only federal taxes, but also local taxes. Special arrangements may be made in which the recipient of the donation can agree to pay the gift tax instead of the donor.

Any transfer to a person, either directly or indirectly, in which total consideration (measured in money or monetary value) is not received in return. Caring is sharing, but some situations often inadvertently cause the need to file a gift tax return, professionals say. The IRS will provide a copy of a gift tax return when Form 4506, Request for Copy of Tax Return, is successfully completed and submitted with justification and payment. If you finally exhaust your lifetime exclusion and have to pay gift taxes, the rate you pay will depend on the value of the taxable donations.

If you're paying tuition or medical bills, paying directly to the school or hospital can help you avoid the gift tax reporting requirement (see IRS Form 709 instructions for more information). Citizens, all money paid directly to an educational institution to cover tuition, or all money paid directly to a medical institution to cover medical expenses.