What is a Gift and is it Taxed?

Th annual gift exclusion is currently $14,000, but will increase to $15,000 in 2018. Does this mean you'll pay taxes on it if it exceeds those amounts? Not likely. Certain exclusions apply, such as paying medical or education expenses of another, giving to your spouse or charity, or giving less than $14,000 ($15,000 in 2018). But even if you exceed that amount, your lifetime exclusion amount is currently $5.6 million, which will increase to $11.2 million in 2018. So unless you are planning some serious gifting, you are unlikely to pay taxes.

What is a gift tax? According to the IRS "[t]he gift tax is a tax on the transfer of property by one individual to another while receiving nothing, or less than full value, in return. The tax applies whether the donor intends the transfer to be a gift or not. The gift tax applies to the transfer by gift of any property. You make a gift if you give property (including money), or the use of or income from property, without expecting to receive something of at least equal value in return. If you sell something at less than its full value or if you make an interest-free or reduced-interest loan, you may be making a gift."