As a CPA in Reno, I understand that you may be having a hard time understanding all the different taxes that are out there. One of the taxes that is not understood is the gift tax.
The IRS defines the gift tax as, “a tax on the transfer of property by one individual to another while receiving nothing, or less than full value, in return. The tax applies whether the donor intends the transfer to be a gift or not.”
Like many taxes, there is an annual exemption for the gift tax. The exemption is $13,000. Therefore, you can give any individual up to $13,000 with no problem. If you give them more than $13,000 in a year then you have to file a special gift tax return.
There are many questions about the gift tax. I will do my best as a CPA in Reno, to answer some of them, but for more answers visit the IRS’ website.
Now that you know what a gift tax is, you might be worried about being taxed for something that you have given. Do not panic. There are gifts/donations that are excluded from this tax. First, remember that there is an exemption; you can give up to the exemption amount without having to worry. Second, if you pay medical or tuition for someone, it is excluded. Third, gifts to your spouse are not included. Fourth, a gift to a political organization is not included. In addition, gifts to certain charities are not included.
If you are worried about what you may owe in taxes, see if your gift falls under one of these categories. Also, if you are the recipient of the gift do not worry. The donor usually pays the tax associated with the gift.
The gift tax is fairly straightforward, but the best advice I can provide is to work with a CPA in Reno if you think you are going to gift a substantial amount of money. You do not want to give a gift or do a good deed and then have the IRS hounding you because you did not pay the appropriate taxes.
Reno’s Best CPA,