Receiving and family

Receiving a gift: do you owe tax?

For: People receiving gifts (recipients) · Scope: US federal income tax and reporting for US recipients, 2026 · Updated 2026-10-08

AI reviewed

As a general rule, genuine personal gifts are excluded from the recipient's income, and any gift tax is generally the donor's responsibility. Donors may have their own Form 709 obligations, and recipients can have separate reporting obligations — for example, for large gifts from foreign persons, or for income the gift later earns.

Cash from parents, family or friends

A genuine personal gift — given without expecting anything in return — is generally excluded from the recipient's income. If the gift was large, the donor may have a Form 709 obligation as the giver. Recipients can still have separate reporting obligations in other situations, such as gifts from foreign persons.

Wedding and holiday gifts

Wedding gifts from family and friends are personal gifts, so the same general rule applies to the couple receiving them. Each giver's annual exclusion applies to what that giver gave.

Income the gift produces later

If gifted money or property later earns interest, dividends or rent, that income is taxable to you. The gift itself and the income it produces are treated differently.

When a “gift” may not be a gift

Money paid because of work or services you provided — for example from an employer or client — may be taxable compensation even if it's called a gift. Review these payments with a qualified tax professional.

Gifts from outside the US

A US person who receives more than $100,000 during the year from a nonresident alien individual or foreign estate (including related persons) reports it in Part IV of Form 3520, separately identifying each gift over $5,000. Gifts from foreign corporations or partnerships have a much lower, inflation-adjusted threshold. Form 3520 is generally due by the 15th day of the fourth month after your tax year ends — April 15 for most individuals. This is reporting, not a gift tax on you, but late or incomplete filing can bring penalties, so review foreign gifts with a professional.

If you later sell gifted property

Basis is generally what the owner paid for property; adjusted basis is that amount after changes such as improvements or depreciation. Fair market value is the price at which property would change hands between a willing buyer and a willing seller. Your basis in gifted property generally depends on the donor's adjusted basis just before the gift, the property's fair market value at the time of the gift, and any gift tax paid. When the value at the time of the gift was equal to or more than the donor's basis, your basis is generally the donor's adjusted basis. Different rules apply when the value was lower than the donor's adjusted basis, or when gift tax was paid — have a qualified tax professional review those cases, and ask the donor for their records.

Examples

A parent's cash gift

Jordan's parents give her $30,000 toward a home. It generally isn't income to Jordan. Each parent may have their own Form 709 question as donors; Jordan keeps a record of the gift.

Gifted shares sold later

An aunt gives Priya shares she bought for $4,000; they're worth $10,000 at the time of the gift. Because the value was higher than the aunt's basis, Priya's basis is generally $4,000 when she sells. If gift tax was paid, specific rules may allow part of it to be added — that depends on the applicable rules, not the full amount paid.

Records to keep

Who gave the gift, the date and the amount
For foreign gifts: the giver's details and each gift over $5,000
For property: the donor's adjusted basis, the value at the time of the gift, and any gift tax paid

Ask the guide about your situation Search gift tax answers

Sources

IRS Publication 525 — Taxable and Nontaxable Income — Current web edition
IRS — Frequently asked questions on gift taxes — Web page (annual-exclusion table updated December 2025)
IRS — Gifts from foreign person — Web page (thresholds stated for 2025)
IRS Publication 551 — Basis of Assets — Current web edition
IRS — Gifts & inheritances FAQ — Web page

General information about US federal rules, not advice about your situation. Each claim was matched to the official wording above and editorially approved by Raj Lahoti (owner approval via instruction, 2026-10-14) on October 15, 2026; it has not been reviewed by a tax professional.