Generally, a transfer to a spouse who is a citizen of the United States isn’t subject to federal gift tax because there is an unlimited deduction for transfers to a U.S. citizen spouse.
However, a transfer to a former spouse isn’t generally eligible for a martial deduction and may be subject to federal gift tax unless the transfer qualifies for one or more of the exceptions explained in this discussion. If your transfer of property doesn’t qualify for an exception, or qualifies only in part, you must report it on a gift tax return.
Your transfer of property to your spouse or former spouse isn’t subject to gift tax if it meets any of the following exceptions.
- It is made in settlement of marital support rights.
- It qualifies for the marital deduction.
- It is made under a divorce decree.
- It is made under a written agreement, and you are divorced within a specified period.
- It qualifies for the annual exclusion.
- It qualifies for the unlimited exclusion for direct payments of tuition or medical care.
A transfer of property to your spouse before receiving a final decree of divorce or separate maintenance isn’t subject to gift tax. However, this exception doesn’t apply to:
- Transfers of certain terminable interests (for example, certain interests in trust), or
- Transfers to your spouse if your spouse isn’t a U.S. citizen
Visit irs.gov to learn more about Gift Tax on Property Settlements.