Talk:Gift tax in the United States
|WikiProject Taxation||(Rated Start-class, Mid-importance)|
Article Needs Overhaul
This article is fundamentally not correct. A gift tax is not considered the taxation of a gift above a certain value as if it were earned income. This implies that the gift tax is levied against the person who receives the gift by adding the value of the gift into the gross income of the recipient. In the U.S., a a gift tax is assesed against the one giving the gift, not to the donee. The gift tax is a supplement to the estate tax, and therefore, it closes the loophole that an estate tax-only transfer taxation system invites (In fact, this was the situation in the U.S. after the estate tax as we know it was first enacted, and it was easily defeated by the non-testamentary transfers of property from the decedent's estate). For those who might be worried about getting hit by the tax, never fear: The gift tax exemption, which is alluded to in the article, requiries a gift over $11,000 (in 2005) before a tax will be assessed. - Timothy Swartz [Note: Above comments were posted by a user at IP address 184.108.40.206 on 23 December 2005.]
At the very least, the exemption should cite to a legitimate legal authority, not to a web blog full of ridiculous advertisements. Currently citation #7 cites to: http://www.irsmedic.com/2013/01/02/estate-and-gift-tax-2013/.
Currently, citation #7 is the only citation that follows this paragraph:
- "There are two levels of exemption from the gift tax. First, gifts of up to the annual exclusion ($14,000 per recipient as of June 2013) incur no tax or filing requirement. By splitting their gifts, married couples can give up to twice this amount tax-free. Note that each giver and recipient pair has their own unique annual exclusion; a giver can give to any number of recipients and the exclusion is not affected by other gifts that recipient may have received from others." — Preceding unsigned comment added by 220.127.116.11 (talk) 06:54, 17 October 2013 (UTC)
Why is the Giftor Taxed?
I want to know why is it that the one giving away the gift is the one who must be taxed? What gain or income is s/he making from giving away a gift? Wouldn't he be losing his wealth or net worth? Shouldn't the one receiving the gift be taxed for receiving the gain/income? Tell me if I'm forgetting or overlooking something! [ This comment made by a user at IP address 18.104.22.168 on 8 February 2006 at 21:40]
- Dear user at IP address 22.214.171.124: You're absolutely right. The donor or giver is realizing no gain or income in making a gift. The philosophy behind the gift tax is completely different from the philosophy behind the income tax. The gift tax, like the estate tax, the payroll tax (the part imposed on employers), and the sales tax, actually burdens a person who is "parting" with money (or other property).
- At least, in the case of the payroll tax, the employer has received something in return (the benefit of the personal services of the employee) and, in the case of the sales tax, the purchaser has obtained a product, etc.
- I cannot answer the "why" of your question at this time, except to say that the philosophy behind estate taxes (inheritance taxes) and gift taxes is probably based in part on the desire for tax revenue to run the government and partly based on the idea that people who are giving away enough "stuff" to actually be liable for these taxes must be pretty well off or have enough resources to be able to afford to pay the taxes. That's not a very good answer, of course. Maybe we need to revisit the issue later. Yours, Famspear 15:41, 9 February 2006 (UTC)
Gift Tax as a Supplement to the Estate Tax
As stated above, the reason why the U.S. taxes the donor is because of the problems an Estate Tax-only system raises. In order to understand this, imagine an Estate Tax [I say imagine, though the U.S. had an Estate Tax-only system before 1920, I think it is] which only taxes the estate at the moment of death. What is the attorney for Bill Gates going to say to him, if, in fact, Bill Gates wants to make sure his wealth stays entirely within his family? Obviously, he or she would tell him to give everything away to those who he would have willed the property to had there not been an Estate Tax. Of course, Bill Gates isn't going to "give" everything away unless he is on his death bed, but a transfer into a trust, in which he is the trustee and beneficiary along with other beneficiaries who are members of his family (or whoever he would want the property transferred to), constitutes a gift in which he is no longer the legal owner of the property. Evern today, property in trust passes outside of probate, because legal title has been gifted to the trustee. Without a gift tax, the Estate Tax is easily defeated through this common though useful tool in Estate Planning, rendering the Estate Tax virtually useless. Let's face it: The government wants its money, and rich people want to keep it to themselves and their family. As long as there is a government, and there are lawyers, there will always be loopholes exploited, and loopholes closed. Which, of course, is why the Tax Code is so complicated. The Gift Tax was a way of closing the loophole that an Estate Tax only system created - Timothy Swartz
- Correct. You've said all that I wanted to say. Nathanpatterson 23:21, 24 May 2006 (UTC)
Would anyone like to expand this article to other countries? Richard Pinch 11:38, 17 June 2007 (UTC)
- I was thinking of renaming it to "Gift tax in the United States" and creating a gift tax stub with a summary of this article for the U.S. Morphh (talk) 12:19, 17 June 2007 (UTC)
- I agree that "Gift Tax in the United States" would work. I don't know whether any other countries have a gift tax, so I don't know if a name change is essential -- but I don't see how a name change would hurt, either. Yours, Famspear 14:38, 17 June 2007 (UTC)
- Just stumbled on this article. I agree with the renaming, however, I think that a better name would be "Gift tax (United States)". This would allow a drafter to use the term "[Gift Tax (United States)|]" in another article and it prints up the link as simply "Gift tax". Pretty cool. (As an aside, you need the "|" with nothing following to get rid of the "()" in a link). It also makes the article a bit easier to find on the search engines. The existing title could then be used for disambiguous link to gift tax articles.Swlenz 00:36, 21 June 2007 (UTC)
Is the exemptions section saying that any gift is exempt, provided that the giver has given less than $1,000,000 for the year? ie, if you gave ONE gift last year more than $12,000, but less than $1,000,000, then you would owe no gift tax? Messiahxi (talk) 14:16, 3 June 2008 (UTC)
Removing item indicating $345,000 annual gift limit
I am going to remove the line in the "Gift tax exemptions" section that says
- "Gifting is limited to a cumulative amount of $345,000 per year [SOURCE?]."
While I am not an accountant, I believe the confusion is the "Maximum unified credit" of $345,800 that appears on line 7 of Form 709, the U.S. Gift Tax Return form (as of April 2009).
That dollar amount matches how much tax would be owed if a person gave (non-excluded) gifts in one year totaling exactly $1,000,000, which can be done without penalty as long as the gifts are all properly reported.
That credit is deducted from any gift tax that might be owed in any one year. By cumulatively and regularly reporting (on Form 709) any non-excluded gifts that keep accumulating over the years, eventually (if the donor is rich enough!) they would end up totaling $1,000,000 (or more) at which time one's entire lifetime tax credit of $345,800 is "used up". After that, one has to start paying gift tax on any non-excluded gifts one makes, since the lifetime credit will have been surpassed.
Regarding this language:
- However, there are some limits, including that you are not able to transfer an interest of a loss as part of the gift. General rules regarding the tax options of gifts can be found in section 102 of the Code.
I deleted it. I'm not even sure what was intended by the phrase "interest of a loss." Section 102 deals with the treatment of certain gifts -- gratuitous transfers of property. So, to be covered by section 102, the "thing" transferred has to be "property" (whether money, or real estate, or corporate stock, or an bushel of apples, or whatever). A "loss" -- or the right to use a net operating loss in the future, for example -- could possibly be treated as "property" in certain circumstances, but that still doesn't explain the statement that you are "not able to transfer an interest of a loss as part of the gift". Section 102 does not limit what you can or cannot transfer as a gift. Section 102 only limits the federal income tax effects of the transfers. Maybe someone can clarify what was intended by the language )?). Famspear (talk) 22:40, 1 May 2009 (UTC)
I just thought of what this verbiage may have been intended to refer to: the basis rule for purposes of determining gain or loss to the donee upon the donee's subsequent sale of property acquired by gift. Stay tuned, I'll try to remember to add something to the article on this. Famspear (talk) 02:32, 2 May 2009 (UTC)
So what is the federal tax rate for gifts? I've read that (as of 2014) it is 30%, but it's not in this article. The "History" section mentions it was originally 25% below the inheritance tax, but it fails to say what that is. — Loadmaster (talk) 18:38, 6 January 2014 (UTC)
- IRS publication 709 (2013) has a table (p. 17) giving rates based on the taxable amount (the amount exceeding the exemption amount), starting at 18% for gifts over $10,000 and up to 40% for gifts over $1,000,000. It would be nice to work this into the article somewhere. — Loadmaster (talk) 18:53, 6 January 2014 (UTC)
The comment(s) below were originally left at several discussions in past years, these subpages are now deprecated. The comments may be irrelevant or outdated; if so, please feel free to remove this section., and are posted here for posterity. Following
|==WP Tax Class==
Start class because needs expansion with some sections devoted to history and impact. Further, more references could be utilized.EECavazos 20:13, 3 November 2007 (UTC)
==WP Tax Priority==Mid priority because important topic in a country and some may read this article out of curiosity as to what constitutes a gift tax in the US.EECavazos 20:14, 3 November 2007 (UTC)
Last edited at 20:14, 3 November 2007 (UTC). Substituted at 16:15, 29 April 2016 (UTC)