No Income tax

• You receive the gift, you do not have to include the value of that gift as income. Gifts are specifically excluded from the definition of income under federal tax law. Therefore, the value of the gift is not taxable to you on your federal income tax return, and you never have to report the gift to the IRS.
  
  

No State Tax

• No state tax, in any state in America, is paid on gifted money or property. Only the federal government imposes a gift tax. Similar to federal income tax law, those state that impose a state income tax do not require you to report gifted money as income.
  
  

Federal Gift Tax

• The federal government imposes a gift tax on people who give substantial gifts. As of 2010, a person who gives a gift of more than $13,000 total to one recipient during the year must file a gift tax return with the IRS. The $13,000 is measured by the recipient and includes all gifts made during the year. So, if you give $6,000 in January and $7001 in August, to the same one person then you will have to file a gift tax return. However if you give one person $12,999 and another person $12,999 during the same year then you do not have to file a gift tax return because no single recipient received more than $13,000 in that year.
  
  

Lifetime Exemption

• The primary purpose of the federal gift tax is to prevent people from giving away all their property before they die as a way of avoiding the federal estate tax. Accordingly, the IRS allows a lifetime exemption equal to $1 million, as of 2010, in gifts to a single recipient. This means that even if you have to file a tax return in one year because you gift more than $13,000, as long as your total lifetime gifts to that same recipient are not more than $1 million, then you will not actually have to pay the federal gift tax.