Wedding gifts bring excitement and joy, followed by the tedium of writing thank-you notes for everyone’s generosity. Fortunately, you don’t need to include the Internal Revenue Service in your post-wedding communications. Although the IRS does have a gift tax, you don’t have to pay taxes on your wedding gifts. The giver is generally responsible, but unless the gift is exceptionally valuable, he won’t have to worry about a tax bill either.
Tax Holiday for Gift Receivers
When it comes to tax liability for gifts, the IRS focuses on the giver, not the recipient. According to the IRS, the donor is generally responsible for paying a gift tax when money or property is passed to another individual. No matter how lavish, your wedding gifts are not considered to be income by the IRS and won’t increase your tax obligation.
Tax Exclusions for Generous Givers
Gift-givers face a tax burden only in very specific circumstances. There is no tax on gifts valued up to the annual exclusion for the calendar year – $15,000 from an individual in 2018, or $30,000 from a married couple. Technically, a married couple could give you a wedding gift valued at up to $30,000 and give your new spouse an additional $30,000 gift and still not be subject to a gift tax. In the case of larger gifts, the giver may be required to fill out Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return. Still, unless the gift pushes the giver over his lifetime estate and gift tax exclusion – $11.18 million as of 2018 – even a very large wedding gift won’t be taxed.
Taxable Wedding Gifts
The general gift tax rule used by the IRS is that any gift is taxable, with exceptions. A wedding gift you give to your new spouse is not subject to gift tax. Also, if someone offers to pay your medical bills or school tuition as a wedding gift, the giver will not be taxed for the value of the gift.
Profits From the Sale of Wedding Gifts
If you decide you don’t want a wedding gift and sell it later, you may need to report the proceeds as taxable income. For example, say your grandmother gives you an antique vase as a wedding gift. She originally bought the vase for $50, but you discover its value and subsequently sell it on eBay for $5,000. The $4,950 in profit that you make could be subject to income tax.