The Gift Tax is a tax that is applied on transfers from one individual to or for the benefit of another (there are some exclusions to this, such as education or medical care) that exceed the gift tax exemption threshold ($5 million inflation-adjusted). There is some portability in tax law in that if your spouse predeceased you after the year 2010 with the remaining unused exemption and an estate tax return was filed, your tax exemption for gift tax can be offset by your deceased spouse’s DSUE ( the deceased spouse unused exemption). The only state that imposes a separate gift tax is Connecticut.

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