Before giving a gift to someone, think about what your intention is for the gift because there may be a better way to ensure your intentions while minimizing or eliminating any gift tax implications.

Some transfers are not subject to the gift tax and therefore can be made for any amount.

Here are some examples of transfers (gifts) that are not subject to the gift tax:

  • Gifts between spouses (there’s no tax reason to go cheap for your anniversary!)
  • Payments that qualify for the educational exclusion (e.g. payment of college tuition for a child/grandchild)
    • The payment must be made directly to the qualifying educational organization – NOT to the child/grandchild for them to make the payment
  • Payments that qualify for the medical exclusion (e.g. payment for surgery or medical insurance for a loved one)
    • The payment must be made directly to the person or institution that provided the medical care for the individual (e.g. to the hospital or to the health insurance company)
  • Gifts to political organizations
  • Gifts to certain exempt organizations (e.g. 501(c)(3) charities)

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