Significance

• Tax-free gifts allow people to transfer monetary funds without being penalized via the Internal Revenue Service of the United States federal government. Such uses of tax-free gifts can be helpful in cases such as when a grandparent wants to assist a grandchild with education expenses, or other similar instances.
  
  

Types

• The IRS details several types of tax-free gifts, as found in Title 26, Subtitle B, Chapter 12 of the U.S. tax code. Types of tax-free gifts include physical and monetary gifts to charities or political groups, money given to someone strictly for education or medical expenses, and any monetary gifts that fall under the current annual limit for monetary giving.
  
  

Identification

• According to United States federal law, a gift is any sort of property -- whether physical or monetary -- in which one individual transfers ownership of the item to a grantee. In the U.S., a gift tax may be charged to the original owner for such property ownership changes. The IRS tax code states that gift taxes are based on the U.S. asset value of the gift adjusted for inflation and tax deductions.
  
  

Time Frame

• Monetary gifts given within the calendar year that fall under the current gift limit set by the U.S. Internal Revenue Service as exempt from U.S. gift taxes. There are three specific gift tax time frames and limits. In one year, gifts worth up to a total of $13,000 in U.S. assets are tax-free. Within the same yearly time frame, couples can give monetary gifts with a U.S. asset value of up to double that of a single giver without having to worry about a gift tax. The third time frame takes into account an individual's lifespan, within which a tax payer may give up to one million dollars in tax-free gifts.
  
  

Considerations

• There are various tax law regulations that govern the issuing of tax-free gifts. These regulations should be taken into consideration when an individual or couple is interested in transfer funds to other individuals and want to minimize their annual tax load. One consideration that should be taken into account is how an individual pays for gift taxes on non tax-free gifts. Gift taxes can be paid immediately, or used to cut back on other taxes. Gift taxes can even be paid in advance of the giving if you plan ahead accordingly.
  
  A tax adviser should be consulted before issuing tax-free gifts in order to determine their full impact on your yearly tax claim and tax returns.