Taxes may not only be imposed to earnings and capital gains on property of an individual or business taxpayer. There may also be tax imposition on certain gifts.

A gift can be in the form of donation or any thing that is received out of love or for the mere pleasure of giving without reciprocity, bargain or the involvement of onerous transactions. It is a voluntary act of transfer without the involvement of trade or exchange of goods and/or services. It is a present given for the purpose of making someone happy or as a kind of favor usually of kindness and forgiveness. It is normally seen as an act of love and friendship rather than an act of responsibility.

Gift can be in any form either tangible or intangible in nature. However, the most popular form of gift is the monetary form such as cash or cash equivalents.

Bestowing money without the expectation of being paid back is deemed a kind of charitable act. People with enough financial resources can put donation to charitable institutions or political organizations. For some people particularly between spouses and family, giving of money is normally seen as an act of responsibility. It is a responsibility for parents to grant finances to children for allowances and for educational and medical expenses.

Gift giving is certainly a good thing and perhaps a more preferred form of transaction. In countries where gift may incur a certain kind of liability however, it may not be a totally wholesome thing.

Countries such as the United States can impose taxes on gifts that are beyond the amount of exclusion as stipulated in the US gift tax law. It is deemed that any gift is taxable but with exceptions.

What Are The Exceptions?
Based on the Economic Growth and Tax Relief Reconciliation Act of 2001, the amount where gifts are not tax-imposable is 12,000 or below starting January 2006. There can be an exception when the gift made between two married couples is equivalent to but not exceeding 24,000. Hence, when a gift given by a donor is 12,000 or 24,000 by married couples, there can be no gift tax imposition. If the amount exceeds on those values, then there may be gift taxes to be paid.

Gift tax is calculated on the present market value of the gift item above the exemption level. However, the donor may have a lifetime umbrella of a certain amount. Thus, any amount in excess of that will be subject to gift tax. In the United States, the lifetime exemption is one million dollars.

Gift tax uses a progressive tax rate. The tax rate increases as the taxable amount increases. It is better to seek for a tax consultant with regards to the calculation of gift taxes.

Exclusions from gift taxes may also apply to payment of educational and medical expenses to someone as well gifts to spouses and gifts to political organization. There can be tax-deductibles from the value of the gifts made to qualifying charities. There are situations which can exempt a person from paying gift taxes. The donor normally pays the gift taxes but in certain arrangements, the donee may elect to levy the amount of gift taxes. It is better to see a tax consultant on the nature and treatments of gift taxes on the recent gift tax law.

Anything with value excluding services that can be transferred with no payback may be subject to gift taxes. The kind of tax is seen as a supplementary to estate tax, another kind of transfer tax. It is seen as an alternative taxation of the government to those who want to avoid inheritance taxes by distributing the wealth of a person to his beneficiaries during his lifetime.

Nevertheless, the payment of gift taxes is considered to be relatively rare compared to other kinds of tax. This could be because of the presence of gift tax exceptions.

The gift tax law as well as the gift tax rates may vary from one country to another. It is better to check the tax revenue agency or tax consultants to have knowledge of this kind of tax.