While the federal government does impose a gift tax, not every gift is taxable. There are a number of exclusions and exemptions that shield gifts from taxation, and one of these is the annual exclusion.
When you transfer property, including money, to anyone other than your spouse, you can give up to a certain amount each year without having to file a gift tax return, and without that transfer being considered by the IRS for gift tax purposes. For 2011, the annual exclusion amount is $13,000. So, each individual taxpayer is allowed to transfer a maximum of $13,000 to each recipient of his or her choosing, gift-tax free. A married couple can combine their exclusions and give up to $26,000 per recipient.
Why does the annual exclusion not apply to spouses? If your spouse is a citizen of the United States, you’re allowed to transfer an unlimited amount of property to him or her, gift-tax free. If your spouse is not a U.S. citizen, there’s a separate annual limit. For 2011, that limit is $134,000.
It’s important to note that the annual exclusion only applies to gifts of a present interest in property. This means property that is transferred in its entirety to the recipient during the tax year in question. Gifts of a future interest in property, where the recipient won’t get complete ownership and control of the property until some point in the future, don’t fall under the annual exclusion.