What is a Gift Tax Return?

C.B. Fox
C.B. Fox
Businessman with a briefcase
Businessman with a briefcase

A gift tax return is a document used to calculate the amount of tax a person owes on a gift to another person. Different countries have different rules on gift taxes, so a person should check their country's tax laws to determine whether he is required to file a gift tax return. Generally, this document is submitted at the same time as a person files his annual tax report.

Not all countries impose a gift tax, and not all countries will have a gift tax return for their citizens to fill out. In the United Kingdom, for example, there is no gift tax, which means that a person may give any amount of money to another person without owing any money on the transfer. There are a number of countries that do not have gift taxes, such as Canada, but that do collect taxes on the gift as a part of the receiver's income. Other countries, such as many European nations and the United States tax the person giving a gift if the amount of that gift is over a certain yearly allowance.

In most countries that have a gift tax, the gift tax return is filled out by the giver, who is responsible for paying taxes on the gift, and not the person to whom the money or goods are given. Some countries also exclude certain types of goods or services from their gift tax law. In the United States, for example, a payment of tuition or medical expenses, while it may be a gift, is not subject to a gift tax. Additionally, gifts to certain charities or to political organizations may be excluded from taxation.

Most people do not need to file a gift tax return along with their regular tax documents. The amount of a gift must exceed the yearly cap before a person is subject to the gift tax. If it does not exceed this amount, which varies from year to year and from country to country, there is no need for them to fill out the document. Additionally, gift tax needs to be reported on each recipient, not on the total amount gifted. In the United States, where the gift limit is $13,000 US Dollars (USD) in 2011, a person can give up to $13,000 USD to as many people as he wants without being subjected to the tax.

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