Any time you give someone money or property, you may be subject to paying a gift tax. The federal government has established guidelines for gift tax exemptions for all money or property transferred. For the year 2009, a person can gift up to $13,000 (the amount is adjusted yearly for inflation) in money or property to another person without triggering any gift tax consequences.
In order for the government to consider a transfer of money or property a “gift”, the “gift” must meet several requirements. First, the gift must be gratuitous in nature. Second, the gift must be complete and voluntary. This means that you must give up complete control of the gift and do so under your own free will (not pursuant to a court order, etc.). Finally, the gift must be tangible in nature (an exchange of services does not qualify as a gift).
As long as the gift is kept at or under $13,000 (for the year 2009), there are no adverse tax consequences to you by giving the gift. In addition, the annual limit for a gift is on a per person basis, which makes annual gifting even more advantageous. For instance (assuming the $13,000 gift tax exemption for 2009 applies), a couple with two children can gift $52,000 ($13,000 to each child by each parent) each year to their children free of estate and gift tax.