When gifting money to someone, person to person, once you go over the $14,000 threshold, how is the money taxed? I need to gift someone $25,000 but not if I'm going to be taxed some crazy number like 40% on the $11,000 over the $14,000 mark for one year. This isn't considered a loan to me, and instead of just doing it, I figured I'd ask questions first before it came back to bite me. Just wondering how this works.==>No.you do not need to pay gift tax to the IRS UNLESS your gross gift amt given to someone is at least $5.45M; For the 2016 tax year, the estate tax exemption is $5.45 million .
BUT, you are married then,you a us gift splitting rule; For gift splitting to be official, both spouses must agree to the gift and specify the situation when filing taxes. In 2016, the gift tax exemption was set at $14K per individual gift annually. Gift splitting allows you and your spouse, a couple to donate a total of $28K before being taxed on the contribution.
For example, let's say you want to give someone $25K. If you make the gift alone, $11K ($25K-$14K) will be subject to gift taxes. So you must file form 709 to report the gift of $11K but as said abvoe you may not have to pay gift tax unless your gift mat is at least 45.45M; however,However, if you split the gift with your spouse, with each of you contributing $14K, both contributions , $28K exceeds $25K so no tax report is needed.