The rates apply to the amounts above the $18,000 annual exclusion.
The first $18,000 of gifts of present interest to each donee during the calendar year is subtracted from total gifts in figuring the amount of taxable gifts. This is the annual exclusion. Your parents can EACH gift $18,000 (this is called gift splitting), for which you are required to file a Form 709.
If possible, your parents should gift $36,000 each year, then no gift tax will be due.
Generally, you must file Form 709 no earlier than January 1, but not later than April 15, of the year after the gift was made.
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