# Gift Tax

*Taxes — Finicade finance glossary*

Gift tax exists to stop people avoiding estate tax by giving everything away before death. It works through two allowances: an annual exclusion per recipient that requires no filing, and a lifetime exemption shared with the estate tax. Gifts above the annual amount don't usually create a bill — they consume lifetime exemption and must be reported. Tuition and medical bills paid directly to the institution are exempt entirely.

**Also known as:** gifting rules, annual gift exclusion

**Related terms:** [Estate Tax](https://finicade.com/glossary/estate-tax), [Estate Planning](https://finicade.com/glossary/estate-planning), [Trust](https://finicade.com/glossary/trust), [Inheritance](https://finicade.com/glossary/inheritance), [Custodial Account](https://finicade.com/glossary/custodial-account)

Source: https://finicade.com/glossary/gift-tax