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Personal Finance

Gift and Estate Taxes: Why You Might Never Owe a Penny

Widely misunderstood rules require that you file paperwork for large gifts although few ever pay taxes on them.

Note: This article is part of Morningstar's October 2014 5 Keys to Retirement Investing  special report.

If you've ever given a sizable financial gift to someone--say, a four- or five-figure check to a child or grandchild--you're probably aware that there can be gift tax implications tied to such a gesture. Yet, how the gift tax works remains widely misunderstood.