Tips on the Tax Treatment of Gifts

August 2, 2023

Gift tax returns generally do not need to be filed unless you give someone, other than your spouse (if he or she is a U.S. citizen), money or property worth more than the gift tax annual exclusion for that year. Here are four more tips regarding the tax treatment of gifts:

1. The annual exclusion amount for 2023 is $17,000. You and your spouse can make a gift of up to $34,000 to a third party without making a taxable gift.

2. You do not have to file a gift tax return to report gifts to political organizations or qualified charities or for gifts made by paying someone’s tuition or medical expenses, as long as the payment is made directly to the institution.

3. Making a gift does not ordinarily affect your federal income tax. You cannot deduct the value of gifts you make (other than deductible charitable contributions).

4. Generally, the person who receives your gift will not have to pay any federal gift tax because of it. Also, that person will not have to pay income tax on the value of the gift received.

If you have any questions about the gift tax, please contact the office for assistance.

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