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Simple English definitions for legal terms
federal gift tax
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A quick definition of federal gift tax:
The federal gift tax is a tax that the government charges when someone gives a gift to another person without getting anything in return. The gift has to be worth more than a certain amount set by the government to be taxed. Right now, that amount is $17,000. This means that you can give someone a gift worth up to $17,000 without having to pay any tax. If the gift is worth more than that, you will have to pay a tax that can be anywhere from 18% to 40% of the value of the gift.
A more thorough explanation:
The federal gift tax is a tax imposed by the federal government on a person who gives property to another person without receiving anything in return. The property given must exceed a certain amount set by the government to be subject to the tax.
For example, if you give your friend a car worth $20,000 as a gift and your friend does not give you anything in return, you may be subject to the federal gift tax.
However, there is a gift exclusion amount that changes each year. As of 2023, the gift exclusion amount is $17,000. This means that you can give up to $17,000 to a person without having to pay the federal gift tax.
If you give a gift that exceeds the exclusion amount, you will have to pay a tax on the excess amount. The federal gift tax rate varies from 18% to 40% depending on the size of the gift.
Overall, the federal gift tax is a way for the government to collect taxes on large gifts that are given without receiving anything in return.
Federal Deposit Insurance Corporation (FDIC) | federal judiciary