Gift Tax

Gift tax is a federal tax imposed on the transfer of money or property from one person to another without receiving something of equal value in return. It primarily applies when the value of the gift exceeds a specific annual exclusion amount, which is adjusted periodically. The giver, not the recipient, is responsible for paying the tax. Certain gifts, like those to charities or for educational and medical expenses, may be exempt. The purpose of the tax is to prevent individuals from avoiding estate taxes by transferring wealth during their lifetime.