What gifts are not subject to the Gift Tax?
Federal law exempts the first $14,000 you give per person per year as of 2016.
To keep pace with inflation this annual exclusion from Gift Tax increases periodically in $1,000 increments.
Certain types of gifts are exempt from taxation. This includes gifts to qualified charities, paying someone's medical bills on their behalf, with no limit, and educational gifts such as tuition and fees. These payments must be paid directly to the service provider.
Federal tax law also offers a lifetime exclusion from the Gift Tax, shared with the estate tax. This means that the value assigned under the estate will be deducted for every gift made once the lifetime credit is used.
** Disclaimer Required by IRS Circular 230** Unless otherwise expressly approved in advance by the undersigned, any discussion of federal tax matters herein is not intended and cannot be used 1) to avoid penalties under the Federal tax laws, or 2) to promote, market or recommend to another party any transaction or tax-related matter addressed.