Gifts subject to the gift tax. The following gifts are considered to be taxable gifts when they exceed the annual gift exclusion amount of $14,000 in 2016. Remember, taxable gifts count as part of the $5.45 million in 2016 you are allowed to give away during your lifetime, before you must pay the gift tax.
Gift tax is not an issue for most people
The person who makes the gift files the gift tax return, if necessary, and pays any tax.
If someone gives you more than the annual gift tax exclusion amount ($14,000 in 2017), the giver must file a gift tax return. That still doesn’t mean they owe gift tax.
For example, say someone gives you $20,000 in one year, and you and the giver are both single. The giver must file a gift tax return, showing an excess gift of $6,000 ($20,000 – $14,000 exclusion = $6,000).
Each year, the amount a person gives other people over the annual exclusion accumulates until it reaches the lifetime gift tax exclusion.
Currently, a taxpayer does not pay gift tax until they have given away over $5.49 million in their lifetime (2017).