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Gift Tax

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Gift tax is assessed if the cumulative taxable gifts made by an individual during his/her life exceed $5,450,000 (2016) (which is the combined estate and gift tax exemption threshold). Each year, an individual (“donor”) may give up to $14,000 (the “annual exclusion amount”), to an unlimited number of recipients (“donees”) without any obligation to report such gifts to the IRS. With the exceptions noted below, if the amount of cumulative gifts to a single donee in a year exceed $14,000, the excess amount is a “taxable gift.” Taxable gifts must be reported on a federal gift tax return (“Form 709”). While a gift tax return may need to be filed, usually the donor’s remaining $5,450,000 (2016) exemption is enough to shelter the gift from triggering a tax. Thus, a gift tax is only owed if the value of the cumulative taxable gifts over the lifetime of the donor exceeds $5,450,000 (2016). That is, the purpose of the gift tax return is to track the cumulative value of the donor’s taxable gifts so that the IRS may measure how much of the donor’s combined exemption remains at his/her death. In addition to annual gifts, the following transfers may be exempt from gift tax:

  • Tuition or medical expenses you pay directly to the education/medical facility for someone
  • Gifts to your spouse
  • Gifs to a tax-exempt organization
  • Gifts to a political organization

DISCLAIMER:The information contained in this website is based on Oregon law and is subject to change. It should be used for general purposes only and should not be construed as specific legal advice by Fitzwater Meyer Hollis & Marmion, LLP or its attorneys. Neither this website nor use of its information creates an attorney-client relationship. If you have specific legal questions, consult with your own attorney or call us for an appointment.