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An Explanation of Gift Taxes

By Sabrina Winters

Each person may gift up to $13,000 per individual per year in 2010.  A married couple may gift up to $26,000 per individual per year in 2010.  These amounts are exempted gifts.  Each person is allowed $1 million lifetime gifting.

If more than $13,000 is gifted to one individual in one year, the person making the gift (the donor) must file a gift tax return in that year.  As long as he has reached his lifetime amount, no tax is due.  The amount of the gift reduces the federal estate tax exclusion amount by the amount of the gift ultimately.

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