The Federal tax laws permit the tax-free giving of “gifts” to others throughout the year, subject to the annual exclusion amount limitations. “Gifts” in this article are not the same as “charitable contributions” or donations. For example, you can not deduct amounts which are given to politcal organizations as a “charitable donation” but a “gift” to that organization can be made.
The 2010 annual gift exclusion limitation was $13,000.00 per recipient. A husband and wife will have a $26,000.00 annual limitation, but read the requirements for “gift splitting” below.  It is also important to understand when a United States Gift (and Generation-Skipping Transfer) Tax Return (Federal Form 709) is required to be filed.  Unless the U.S. Congress changes the annual limits, the same annual exclusion amounts are applicable for 2011.   The IRS website provides information for Frequently Asked Questions (FAQs) on this subject. (more…)