Gifts and Gift Taxes

Physician's Money Digest, December15 2003, Volume 10, Issue 23

A gift is tax-free to the one whoreceives it—give your granddaughter $1million and she owes no taxes on it. You,on the other hand, pay a gift tax on anyamount over $11,000. If you stay underthe $11,000 limit, though, you pay no taxand you don't even have to report the gifton your tax return. If you're married,your spouse can also give up to $11,000and pay no gift tax. You can give it to asmany individuals as you like. If you payyour granddaughter's college tuition, itdoesn't count toward the $11,000 limit aslong as you pay the college directly anddon't give the money to her. But, sinceyour granddaughter is not a qualifiedcharity in the eyes of the IRS, you can'tdeduct any gifts to her.