This is not completely accurate, there is still the $13,000 limit to avoid taxation.
If you are doing so via multiple sources, this can be an issue.

Giver=will have to pay gift tax > $13000 per year to one person
Receiver= will have to report gift as income.

That's the reason behind the SSN.

Gift received is not income for tax purpose.

There are conflicting reports on here that say the gift limit is 11k and 13k. Can anyone confirm this? which one?

For those of us who are doing 12x$1000 obviously this could make a difference in our habits.

It's now $13,000 and has been so since 2009, I believe.

There is a LOT of BS in this thread.

Gifts to spouses are basically UNLIMITED if your spouse is a U.S. citizen.

"If your spouse is a U.S. citizen, then due to the unlimited marital deduction you can gift any amount to your spouse without incurring any federal gift tax or state gift tax consequences as long as the gift is of a present interest.

If your spouse isn't a U.S. citizen, then you are given an annual exclusion from gift taxes for gifts of a present interest made to your noncitizen spouse. In 2011 the annual exclusion from gift taxes for gifts made to a noncitizen spouse is $136,000, and this amount will increase to $139,000 in 2012."

You can read more about the gift tax and estate tax here: http://www.irs.gov/publications/p950...blink100099451

Not so worried about spouses, but I do recall from the coin game that lots of people have significant others. And the amount of significant others is often significant. To do volume takes more than one spouse with an SS#. Anything less than volume is not very time/cost effective?:p

While gifts to a US citizen spouse may be unlimited, the true limitation will be the amount that sets off a cardinal's tripwire. Massive amounts of automated low volume, low net cost transfers under the tripwires would be the optimal strategy.

Not sure any of these are actually gifts since you expect something (the full value) in return.

From the IRS website:

"The gift tax is a tax on the transfer of property by one individual to another while receiving nothing, or less than full value, in return. The tax applies whether the donor intends the transfer to be a gift or not.

The gift tax applies to the transfer by gift of any property. You make a gift if you give property (including money), or the use of or income from property, without expecting to receive something of at least equal value in return. If you sell something at less than its full value or if you make an interest-free or reduced-interest loan, you may be making a gift."

But there is also the unified credit.

Unified Credit (Applicable Credit Amount)

"A credit is an amount that reduces or eliminates tax. The unified credit applies to both the gift tax and the estate tax and it equals the tax on the applicable exclusion amount. You must subtract the unified credit from any gift or estate tax that you owe. Any unified credit you use against gift tax in one year reduces the amount of credit that you can use against gift or estate taxes in a later year.

Beginning in 2011, the amount of unified credit available to a person will equal the tax on the basic exclusion amount plus the tax on any deceased spousal unused exclusion (DSUE) amount. The DSUE is only available if an election was made on the deceased spouse's Form 706.

The unified credit on the basic exclusion amount for 2011 is $1,730,800 (exempting $5 million from tax) and is $1,772,800 for 2012 (exempting $5,120,000 from tax).
The following table shows the unified credit (recalculated at current rates) for the calendar years in which a gift is made or a decedent dies after 2001."

Understand now?

Thank you for the quote from the IRS. This is what I was referring to. It's not a gift if you are getting the money back. A possible 1099 is not an issue.

The gift tax is paid by the person sending the payments. The 1099 is issued to the person receiving the payments. One has nothing to do with the other.

It's not a gift since you expect to get the money back. No 1099 required even if it were a gift. The form for gifts is Form 709 and it is explained here: http://www.irs.gov/pub/irs-pdf/i709.pdf

The gift tax doesn't affect the recipient--only the giver. And it affects the giver's unified credit. The unified credit would apply IF it were a gift--which it isn't.

"The unified credit on the basic exclusion amount for 2011 is $1,730,800 (exempting $5 million from tax) and is $1,772,800 for 2012 (exempting $5,120,000 from tax)."

Do you understand the unified credit?

You missed the whole point. AP could care less if this is a gift or not. The 1099 is being issued to the one receiving the payments. Do you understand this? So save your rant for the IRS.

Why would you want to waste your unified credit on this? It should be non-taxible as it's not income, so don't waste your credit...you don't get $5 million exemption each year, just a lifetime total

Exactly. Plus it is NOT a gift and who-ever started that silliness did a disservice. Even if someone mischaracterizes the transfer as a gift, it doesn't solve the problem, which is the receipt of a Form 1099 showing gross income.

If someone receives a Form 1099 as a result of receiving back $100,000 of his own cash (whether he received it back from himself, his spouse, or an individual to whom he/she is not married), that someone has to report $100,000 of gross income on his tax return. There is no "deduction" line on the tax return for $100,000 "gift received" so the gift argument is useless.

There are plenty of "deduction" lines for basis and commissions, which is what a "normal" seller uses. If a real seller gets a $100,000 Form 1099 for selling property on Amazon that cost him $95,000, he reports the $100,000 as gross income and the $95,000 as basis, giving him a $5,000 profit.

The $100,000 on the Form 1099 has to be reported as gross income, otherwise the IRS will send a notice and a tax bill. The key is reporting the offsetting "deduction". Most of us would argue that someone who uses a service such as this to send himself $100,000 of his own money, whether that is done using a friend or not, is entitled to a $100,000 deduction for basis, resulting in $0 of taxable income.

There are two problems with the receipt of a Form 1099:

1. Filling out a Schedule C with the exact same amount of gross income and same amount of offsetting deduction, i.e. a taxable income of $0 every year looks strange, and

2. It raises the unanswerable question as to whether the value of the miles / points / cash back reward is taxable.

So it is better if none of use receives a Form 1099 for personal payments, but we can't keep the sender from doing so, because they can't distinguish between the guy who sold $100,000 of product and the guy who managed to send $100,000 of his own cash to himself. I wasn't able to use Amazon or Serve to that level, so I won't get a Form 1099.

Also the whole discussion started with the requirement of social security numbers by Amazon payments. I was asked for it also. And I didn't receive a single penny with my account. I only used it to pay. So I think it's not an indication that Amazon will produce 1099s for people who don't receive $20k or 200 payments.