What Is A Gift Tax?
A Gift Tax return is required if you give a "taxable" gift,
that is, a gift subject to gift tax reporting. Generally, any gifts in excess
of $11,000 per person in a calendar year would be considered taxable gifts. A
married couple may elect to split a gift, on Form 709 or 709-EZ, which allows
them to give a combined total of $22,000 in one year to an individual without
any part of it becoming taxable.
The term "taxable gift" is also a bit misleading, since, in most cases, you
do NOT owe a tax with the gift tax return. You are allowed one lifetime unified
credit against estate and gift taxes, which allows you to pass property worth
$1,000,000 with a unified credit of $345,800 to heirs or others without incurring
an actual tax. Each "taxable" gift you give during your lifetime reduces that
allowance, dollar for dollar. When the entire $1,000,000 with a unified credit
of $345,800 is used up, during your lifetime or when passing property to your
heirs when you die, a gift tax or an estate tax, depending on the situation,
is due on the excess.