In today’s era, it is common to exchange gifts with friends, families, and relatives but you will be excited to know that there is a tax imposed on such gifts in the USA. One of both, either the donor or receiver is liable to pay the tax, depending on the nature of the gifted item. Some presents are also there on which taxes are applicable. In this article, in-depth information will be provided regarding the IRS Gift Limit, amount of tax, and many more.
IRS Gift Limit 2024
According to the rules and regulations being formed by the US federal government, citizens are obliged to file tax returns while exchanging hefty gifts. Generally, it is the donor to pays the tax while in some situations, this tax might be on the receiver also. The IRS Gift Limit indicates that gifts valued below a certain threshold do not have to be reported to authorities.
This limit has been exceeded in 2024 by $1000 and constitutes a total of $18000. This indicates that a US citizen can present a property and can transfer the property to the name of the recipient and yet not be liable to pay any tax. If the cost of the gift is more than the specific limit, the giver is obliged to file a tax return, after which the cost will be added to the lifetime gift tax limit. According to the updates, in the year 2023, this limit was $12.92 million.
What is the IRS Gift Limit for spouses and minors?
This limit varies as per the gift item being presented. As per the Internal Revenue Service, in the case of a married couple, the limit is $36000. This can be considered as the amount under which a couple is free to gift any property to their spouse without falling under the category of gift tax-payer.
The couple can give the specified amount within the current year. In this context, if a couple has two children, they can each receive a gift of the mentioned amount from the couple.
In the case of both minors and spouses, the IRS Gift Limit is similar, which is mentioned in the above section of the article. If the wife/husband does not hold the citizenship of the USA, then the gift shall not be considered under this limit. It will be obligatory to pay the tax on transferring the ownership of an asset to their spouse.
IRS Tax Rates 2024
If the total value of the gifts exceeds the lifetime limit, the taxpayer will be responsible for paying taxes according to the table below. The amounts specified in the table are above the allowed limit and will be subject to taxation.
| Amount Taxable | Tax Rate |
| Less than $10000 | 18% |
| Between $10001 and $20000 | 20% |
| Between $20001 and $40000 | 22% |
| Between $40001 and $60000 | 24% |
| Between $60001 and $80000 | 26% |
| Between $80001 and $100000 | 28% |
| Between $100001 and $150000 | 30% |
| Between $150001 and $250000 | 32% |
| Between $250001 and $500000 | 34% |
| Between $500001 and $750000 | 37% |
| Between $750001 and $1000000 | 39% |
| More than $1000000 | 40% |
IRS Tax-Free Rates 2024
All the rates shown in the above section in a tabular form are for the year 2023. The official rates for the next year i.e., 2024 have not been mentioned yet and are supposed to be released soon by the authorities responsible for determining and imposing the tax by the next month. Furthermore, some gifts do not fall under the category of federal taxes. Some of the presents are mentioned below:
- Gifts that are worth less than the annual permitted IRS Gift Limit.
- Presents offered to political organizations should not be publically accessed. This shows that only the authorities hold the right to enjoy the advantages of the received gifts.
- When an individual gifts anything to their spouse who has a proven citizenship of the United States of America.
- Medical incidentals and education fees are paid directly to the concerned organization. If money is initially given to an individual and then transferred to an institution, it will be regarded as a taxable gift.
All citizens are required to adhere to the rules established by authorities to prevent fines or extra fees. The beneficial aspect is that citizens can qualify for Federal Tax relief if they carefully observe the Tax Limit. This not only saves money but also enhances their quality of life.
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FAQs Related to IRS Gift Limit 2024
The aggregate value of the presents is obliged to pay tax only if they are worth more than Rs.50,000.
The IRS Gift Limit as per 2021 federal rule is 17,000 dollars per year per person for a candidate, and this amount is 34,000 dollars for spouses who used to live together or acting jointly.
You are not obliged to pay any tax or file a gift tax return if the present donated by you is worth less than $17,000 as per the federal rules and regulations made by the USA.
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