Children's Gifts

• Any money given to support a minor child is not a gift; therefore, it is tax-free. If parents gift educational expenses directly to the school, then gift tax is not applicable. Parents may also gift medical expenses without incurring gift tax, but they must also pay it directly to the facility. Monetary gifts given to adult children are subject to the gift tax if the amount exceeds the personal gift limitation amount.
  
  

Individual Limit

• As of 2010, an individual may gift up to $13,000 to another individual before having to report the gift. The giving person may bestow this amount upon as many people as he would like throughout the year. For example, you may bestow $13,000 upon 100 people in 2010 and not owe any gift taxes.
  
  

Couple Limit

• Together, couples may give individuals or other couples up to $26,000 before having to report the gift. It must be obvious that the gift is from both individuals. Most commonly, the gift is a check drawn from a joint banking account, payable to the individual or couple who is receiving the gift. The check can then be deposited in an individual or joint bank account.
  
  

Lifetime Gifts

• Gifts that exceed the $13,000 for individuals and $26,000 for couples are "lifetime" gifts. Each individual has a limit of $1 million of "lifetime" gifting before gift taxes are required. The person giving lifetime gifts must fill out IRS Form 709 to declare the gift in order for the lifetime total to remain current. When an individual reaches the lifetime limit, she must include the tax payment with the tax form.