Since it is almost the end of the year, everyone should get their finances in order in addition to a little holiday shopping. One thing to remember is the limitations of gifting. If you give a person more than $12,000, you have to pay taxes on it. Gifts may not be solely monetary. If you give someone else something that has monetary value, while expecting nothing in return, then it is a gift.
There are a few exclusions on what is considered a gift. If you pay tuition for someone else, then it is excluded. The same goes for medical expenses. Your can give your spouse as much money as they want and it is not considered a gift. Finally, any gifts to political organizations are also excluded since law makers don’t want to hurt their own bottom line. Remember that freedom is not free in the monetary sense.
If you want to give your children money, you should do so before the year is over. You and your spouse combined can give each child $24,000 tax-free. Just remember to stay below this limit or the IRS will take a bite out.
For more information, you can check IRS Publication 950.