- Certain amounts are excluded from the gift category for tax purposes. In 2010, the annual gift tax exclusion amounts to $13,000 per person. That means if you give a gift valued at less than $13,001 to your child, you do not have to pay federal income tax on the gift amount. Your spouse may also give your child a gift valued at $13,000 or less and not incur any federal income tax liability. If the gift is part of a trust arrangement, each donor's gift exclusion amounts to $13,000 as well.
- If the gift you give to a child or anyone else qualifies as education or medical in nature because you paid it directly to a health care professional or an educational institution, the gift is generally nontaxable. If you made a gift to your spouse, no tax is charged. The nontaxable classification also applies to gifts made to charities or to a political organization for its use.
- File Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, if you gave gifts to anyone in an amount above the annual exclusion. Also file the form if you and your spouse split a gift or if you gave a gift to someone who cannot use the gift until sometime in the future. You also must file the form if you gave your spouse an interest in a property that ends by virtue of a future event.
- The complexities of IRS gift tax laws make it difficult for a non-professional to navigate the applicable tax code. For that reason, enlisting the aid of certified public accountant or an attorney may be necessary, especially if the gift transfer is exceedingly large or complex, involves multiple donors, requires a fair market value analysis or if you plan to split a gift.