Listen to a Business English Dialogue about Federal gift tax
Arthur: Hi Katherine, do you know what the federal gift tax is?
Katherine: Hi Arthur. Yes, it’s a tax on the transfer of property by one individual to another while receiving nothing, or less than full value, in return.
Arthur: Right. The purpose of the gift tax is to prevent people from avoiding estate taxes by giving away their assets before they pass away.
Katherine: Does everyone have to pay the gift tax?
Arthur: No, there’s an annual exclusion amount, which allows individuals to give a certain amount to each recipient each year without triggering the gift tax.
Katherine: What happens if someone exceeds the annual exclusion amount?
Arthur: If the total gifts exceed the annual exclusion, the giver may have to pay the gift tax, but there are lifetime exemptions that allow individuals to give a certain amount over their lifetime without paying the tax.
Katherine: Are there any exceptions to the gift tax?
Arthur: Yes, gifts to spouses, charities, and certain educational or medical expenses are generally exempt from the gift tax.
Katherine: That’s good to know. So, the federal gift tax is mainly aimed at regulating large gifts to prevent tax evasion?
Arthur: Exactly. It’s designed to ensure that the transfer of wealth is done fairly and transparently.