If you gave any one person gifts in 2007 that are valued at more than $12,000, you must report the total gifts to the Internal Revenue Service and may have to pay tax on the gifts. The person who receives your gift does not have to report the gift to the IRS or pay gift or income tax on its value..
There are some exceptions to the tax rules on gifts. The following gifts generally are not taxable and do not count against the annual limit:
· Tuition or Medical Expenses that you pay directly to an educational or medical institution for someone's benefit
· Gifts to your Spouse
With the consent from your spouse, you can make a gift of up to $24,000 ($12,000 x 2) to the same person without making a taxable gift. This is commonly known as splitting gifts between spouses. Essentially, it means a gift by you or your spouse to a third person can be considered as made one-half by each of you provided there is consent by both spouses. (Source IRC)
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