The Gift tax is a tax on any gifts made that are in excess of twelve thousand dollars to any one recipient.
When someone gives something of significant value, usually in excess of twelve thousand dollars, the giver is subject to paying a tax to the United States government. The tax is in place to prevent complete wealth transfers by the elderly who attempt to dodge the estate tax by giving their children all their assets before passing on. The twelve thousand dollar limit (which is set by the US govt and may change) applies only to one recipient. E.g. a donor who wishes to disperse her wealth among her four children would be allowed to gift a total of $48,000 (12,0000 each) to her children.
Gifts that are below ten thousand dollars, or given to one's spouse or charities or political parties are exempt from the gift tax. However income generated by an asset is taxable even if it is gifted.
Most estate planning strategies try to maximize these limits in order to pay as little estate tax as possible.
The gift tax laws while rarely enforced on frequent small gifts can be become complicated on more expensive ones. Thus it may be best to consult a tax attorney before making large gifts.
-Santa Claus is exempt from the gift tax as he is not a US resident
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