Client Resource Center

Practical answers for your questions

1450 Frazee Road, Suite 714 • San Diego, CA 92108
Phone: (619) 297-1040

When are gift taxes due and who pays them?

Question: When are gift taxes due and who pays them?

Answer: Gift taxes are due on certain transfers of wealth. If and when gift taxes are due, the donor is liable for them. The recipient of the gift is not taxed. (Note that gifts to charity are not subject to gift taxes.)

The combined estate and gift exclusion is $11.4 million. In addition, you're entitled to make annual gifts of up to $15,000 in 2018 and 2019 to as many individuals as you like without incurring a gift tax. The tax law lets you give away more than this annual limit in certain cases. For example, you can generally make unlimited gifts to your spouse. You can also pay an unlimited amount of medical or tuition expenses for another person as long as your payments are made directly to the institution.

Gifts beyond the limits indicated are subject to tax at a maximum rate of 40%. If this occurs, ask for clarification on how this should be reported.