For 2011, the annual gift tax exclusion is $13,000, meaning that without gift tax implications, you can gift a total of $13,000 throughout this year to as many people as you wish.
In addition to that $13,000 annual gift tax exclusion, the tax laws allow you to give an unlimited amount for certain educational or medical purposes for as many people as you wish, provided that certain requirements are met. Key among those requirements is that the payment must be made directly to the qualified educational or medical provider. Specific rules exist as to what educational and medical expenses are covered under this “unlimited” gift option.
Of course, there is no gift tax limit on the amount of gifts to charity or to your United States citizen spouse.
Otherwise, gifts in excess of the annual gift tax exclusion that do not qualify for the qualified educational or medical exception must be reported on an IRS gift tax return (IRS form 709) and applied against your lifetime gift tax exclusion (with gift tax due once the lifetime gift tax exclusion is consumed).
See post from October 27, 2011.