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Gift Tax

Definition - What does Gift Tax mean?

A gift tax is a tax that the giver of a gift must pay if that gift exceeds $14,000 in value. Also, the same $14,000 applies to a sum total of gifts given in a certain year. So, a person who gives a one time gift, or a collection of gifts, in a certain year that has a value over $14,000 must pay a tax on those gifts. There are, however, exceptions to this rule such as gifts to a spouse, gifts to a political organization, gifts that cover medical or education expenses, etc

Justipedia explains Gift Tax

Certain gifts have such a large value that the government believes it is necessary to put a tax on them. For example, if a man gives a female friend a $30,000.00 gold necklace, this would be something that would trigger a gift tax. Another example would be a woman who gives ten of her friends a $5,000.00 bracelet each. Large gifts reflect large movements of financial value. Large movements of financial value are often taxed in the United States.

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