The term “gift tax” refers to the giving of any financial or property based gift from one individual to another, making in some cases the gift subject to taxation by the IRS. Also, if one individual sells another person an item or property at an amount that is considerably less than the assessed value of the item, this transaction may be subject to the same taxation. While the gift tax does apply in Florida, it is important to note that the gift tax law is not generally state specific- the IRS is a federal institute which sets the gift tax rules, and which apply throughout the US, including in Florida.
Understanding the Gift Tax Law in Florida
Basically any item of value that is transferrable from one person to another is possibly taxable under the gift tax law, however there are a multitude of situations that make the gift exempt from taxation. For instance, if one person gives another a gift of money once a year, there is no gift tax imposed on the first $10,000 given each year, and if someone gifts another person money in order to assist the individual in any medical or educational expenses the assistance provided is considered exempt from taxation as well if the bills are paid directly to the school or medical provider.
Also, as a general rule, any gift given from one spouse to the other, or a gift which is given to any registered political organization or charity organization is considered exempt from taxation under the gift tax law as it applies in Florida and elsewhere in the US.
IRS Publication 950
The IRS both created and released to the public a reference document titled Publication 950 in an attempt to give the public as much information as possible about the aspect of both gift and death tax. This publication explains under which circumstances any financial or property based gift given from one person to another is either exempt from or subject to the gift or death tax. The document also explains what party is to be taxed in situations where a gift or death tax may be imposed, whether it be the person giving the gift or the party receiving the gift. In addition, Publication 950 also fully explains when a person should consider filing any tax return for receiving or giving a gift under the gift tax or death tax law.
Gift tax and the State of Florida
In the state of Florida, there are no separate state laws that impose a gift tax, and gift and death taxes aren’t typically imposed on most gifts of value. In any case of an estate transfer, the tax liability is usually equal to or less than the amount imposed by the federal government. This is generally referred to in Florida, as in most states, as the “pick-up” tax. Under the state of Florida’s pick-up system, the estate tax is not considered due unless the estate in the situation is required by law to file any type of federal tax return. Any information that is needed on this subject in great detail can be found in the IRS document referred to earlier, Publication 950.
If you are concerned about your tax liability when giving or receiving a gift, it is a good idea to consult with a qualified and experienced attorney. Your Florida lawyer can help you understand both what your tax liability may be and also how to minimize that tax liability during the gifting process.