I already gave $15k to a relative last year. Can I give more this year without paying a gift tax? Or is it a one-time rule?
There’s no actual gift tax like you’re thinking. The $18k limit is just for reporting. You’ll need to file a gift tax return, but you won’t owe taxes unless you give away more than your lifetime exclusion, which is in the millions.
And yes, it’s a yearly limit per person.
@Lane
Exactly. I’m a CPA and can confirm that’s how it works based on IRS rules.
The gift tax exclusion is a yearly thing, not a one-time rule. You can give up to the limit each year.
The annual gift limit is often misunderstood. You can give more than the $18k limit, but you have to report it using IRS form 709. The extra amount will just count against your lifetime exclusion, which is around 13 million. No taxes until you exceed that.
@Scout
Just to add, the annual limit is adjusted every year, and for 2024 it’s $18k.
You can give up to $18k every year without worrying about gift tax. I’m waiting for that from my parents too!
Gift taxes only come into play for large estates, with a lifetime limit currently around 14 million.
You do need to report any gifts over $18k per person in a year, though. Here’s an example:
Bob and Jane, who are married, want to give their daughter Mary and her husband Steve money. They can give them $72,000 in a year without filing anything by splitting it like this:
- Bob gives Mary $18k
- Bob gives Steve $18k
- Jane gives Mary $18k
- Jane gives Steve $18k
If they just gave the $72k to Mary all at once, they would need to file Form 709 with the IRS when they file their taxes. But no actual tax is paid unless the estate exceeds the exemption amount.
Talk to your CPA, but you shouldn’t have any issues with this.
My relative gave their grandchild $80k as a gift for a wedding and a house. It was just considered part of their inheritance. We were told there would only be taxes if the relative gave away more than 14 million over their lifetime, which wasn’t the case.
@Tao
Can you clarify what you’re trying to say here?
@Tao
So did you have to pay taxes on that gift or not?
Lian said:
@Tao
So did you have to pay taxes on that gift or not?
No taxes were due at the time. The relative just had to report the gift over $18k to the IRS for record-keeping purposes. The IRS only cares about gifts over 14 million during a lifetime. States may have their own rules, though.
But in your case, if you’re giving $18k or less, you don’t even need to report it. If it’s over that, you need to fill out Form 709, but still no taxes will be due until you reach the lifetime limit.
Lian said:
@Tao
So did you have to pay taxes on that gift or not?
No taxes were paid. The grandfather would only need to worry about taxes if he gave away more than 14 million in his lifetime.
Lian said:
@Tao
So did you have to pay taxes on that gift or not?
Gifts over $18k aren’t taxed. They just need to be reported. The IRS uses this info to prevent tax evasion and track lifetime gifting. If you gave me $1 million and it’s under your lifetime limit, there’s no tax to pay. The only tax comes after you cross that lifetime threshold.
Lian said:
@Tao
So did you have to pay taxes on that gift or not?
If you go over the annual limit, you file a gift tax return. This is considered when calculating your lifetime exclusion for when you pass away. No taxes are due at the time, only when your total estate exceeds the taxable amount after death.
Yes, the limit is for each year, so you’re good to go again.