what is a gift tax 
a gift tax is a federal tax imposed by the internal revenue service irs on individual taxpayers who transfer property to someone else without receiving anything of substantial value a gift can include cash real estate and other forms of property the irs limits how much can be transferred to someone as a gift any amount over this threshold must be reported and applied toward a lifetime gift tax exemption defining a gifta gift is anything of value that is transferred from one individual to another according to the irs the transfer may occur either directly or indirectly where full consideration is not received in return 1 to prevent people from avoiding paying income taxes the federal government created the federal gift tax this tax prevents undue hardship and obliges donors and recipients to honor their tax liability to the irs the following table shows what constitutes a gift 2irs limitsthe irs sets limits to how much people can gift annually and during their lifetime in 2024 individuals can give up to 18 000 to one or multiple people without being taxed 3someone with three children can gift as much as 18 000 per child for a total of 54 000 without needing to pay a gift tax for the year the lifetime limit for gifting is 13 61 million for 2024 4a married couple filing jointly can transfer up to 36 000 in 2024 5 couples are taxed if they exceed the annual exclusion limit and that amount counts toward their lifetime limit as a donor individuals report any gifts by filling out form 709 united states gift and generation skipping transfer tax return even if the gift falls under the annual limit and is untaxable this form must be attached to an annual tax return by the tax filing deadline of the year after the gift was made which is typically april 15 6gift tax rates are based on the size of the taxable gift and can range between 18 and 40 7 in cases where the value is not immediately evident such as art or stocks taxpayers use the fair market value fmv of the asset to assess their tax liability 8a generation skipping transfer tax gstt of 40 is levied when a gift over a certain amount is given to someone 37 years younger than you 9 that limit is the lifetime exclusion which is 13 61 million for 2024 4gift tax strategiesindividuals can gift more than the annual exclusion without reducing their lifetime gift tax exemption under certain 529 college savings plan contributions individuals report this gift as being spread over five years on their tax return and file the form annually however they cannot make additional gifts to the same recipient during this period 11examples