Gifts Between Spouses

One spouse may make gifts to the other spouse in any amount without paying federal gift taxes if the spouse is a U.S. resident. However, it must be an outright gift or set up as a proper trust. Most, but not all, state laws have done away with taxes on gifts between spouses.

The same is not true with respect to gifts to other family members or to persons outside the family. Gifts to children, other relatives, people outside the family, and trusts may be taxable if they exceed a certain amount per year. Under federal tax law, one person may give someone other than a spouse up to $11,000 per year without paying any tax on the gift (as of 2005). A married couple could give $22,000 to a person each year without paying a gift tax. If the total gifts exceed a certain dollar amount, that could reduce the estate tax credit available to the donor. Tax on estates is a changing area of the law. A tax consultant or a lawyer specializing in gifts and estates can provide up-to-date information.