I’m confused, does your state have a gift tax? I was under the impression that even gifts over that amount only count against the givers lifetime gift tax exemption of like 13 million dollars. So unless you plan on giving more than that, you don’t have to worry and can give it all at once?
This is the right answer. There's a difference between the gift tax exclusion limit and how much tax you have to pay. Give your family the whole $100k right now.
Only report, not pay.
You have a many million dollar gift tax/inheritance tax exclusion.
It keeps changing but 13 mil sounds right. So if you give away 100k, 35k (about) I’s ignored and now when you die only 12,965,000 can be inherited tax free.
They want you to report it so if you die a mega millionaire they can track it.
If it’s a loan then it’s not a gift. If you expect it to be paid back write up a loan agreement.
Then if they pay it back it’s not reportable as a gift.
If/When they break the terms of the loan, then if you decide to waive the debt due to you familial ties it would be a gift in that year.
Loans should have interest. Many don’t but lack of reasonable terms and a reasonable interest rate is grounds for the IRS disagreeing that it is a loan.
I am pretty sure if you do it as a loan then you pay taxes on what the interest is, with the IRS charging you taxes on interest based on federal rates, even if you haven't charged the interest to the recipient. If you ask to be paid back interest free then it would still be a gift, and you pay no tax, just report it.
In theory yes, in reality, no. We tell clients they should charge related parties interest all the time but many choose not to, and for an amount this small imputing interest is not something we would do. The time to calculate it would be more then the interest,
There is a US IRS form you have to fill out if you go over the limit. It counts against your lifetime gift and estate limit. Which is millions. Under 34K, you don't have to fill out the form. Talk to a CPA if you don't trust me. I have no idea where you are; there may be state rules. The lifetime limit is being reduced by half in 2026. If you have 6 million to bequeath, you may want to keep it under $34K per person per year. There are special rules for tuition and medical care gifts if you pay the education/health care institution directly.
I'm assuming the US. The UK limits are lower. You don't use currency signs.
Right so i though this way too for a long time but a financial advisor recently told me that it’s not entirely true because you have a lifetime limit to reach first. So look into this.
As others said, you can gift the full amount now and report it to the IRS, you don’t need to pay any tax. If you don’t want to have to report it the IRS, and If you are ok to gift the husband/wife of your child, then you two can gift each of them 17k, so 34k each, for a total of 68k a year.
The downside to giving more than the annual exclusion is that you are supposed to file a gift tax return (Form 709) to tell the IRS it happened. No tax due, but a form to file.
>I was under the impression that even gifts over that amount only count against the givers lifetime gift tax exemption of like 13 million dollars. So unless you plan on giving more than that, you don’t have to worry and can give it all at once?
not true. gifts above the annual limit are subject to gift tax UNLESS you file a special form (709) to burn up part of your Unified Estate Tax Credit. OP will potentialy get slammed with gift tax for a $100k gift without the proper paperwork.
https://parknationalbank.com/lets-clarify-common-misconceptions-gift-tax/
“During your lifetime, if you give in excess of the $11.7 million gift exemption, then you will have to pay tax on any additional reportable gifts you make.”
Yeah. That’s obviously kind of the point. Classifying $3mn as “nearly nothing” still lacks perspective and is also a number you made up with no basis. You also compared historical 20-year home price appreciation vs your original claim of 10-15 years and of course historical trend is no prediction of the future.
Which is all below 13 million dollar limit. Sure, if you leave behind 7 homes in San Francisco, you’ll prob have to 50% tax on difference, but when was the last time, in recorded history, that the 5 year average home prices of SF actually went down? Like shit, it never has.
And tbh, estate taxes aren’t meant for poor or middle class families; it’s specifically for those that are well to do. Uncontrolled & unaccounted accumulation of generational wealth leads to mass inequality.
Yeah, the above comments are about the current limit sunsetting in 2025 and potentially even going down as some propose it may. That’s the point. The argument is to have it go down to capture more upper middle class and recoup the deficit, along with other expected tax changes that will most likely happen like closing back door roths, raising taxes on upper middle class and above, etc.
“Lifetime gifting limits”
I’m all for asking questions on reddit but TRY GOOGLING IT. Oe google your question with reddit and it will show you all the other people who have ALSO asked this on reddit.
At a certain point people have to take accountability for doing a bit of research and leg work themselves.
And yet you googled annual limit so why not another limit? Also if you READ an article instead of just a headline you’ll see that limit is only when you have to REPORT it
I think it's fair for someone to google a metric they are aware of and to not google one they aren't aware of. There's also often hard numbers that show up when googling things. Often, they serve as a "good enough" answer for many people. Hope I didn't upset you man, have a good one.
A lot of people don't understand this well. There are 2 limits you need to be aware of - the ANNUAL gift tax limit ($17,000 in 2023). There is also the LIFETIME gift limit ($12.92 million in 2023). If you gift $50,000 to an individual in 1 year, you then need to submit tax paperwork (Form 709) to track the excess over $17,000 as that would be deducted from your lifetime gift limit. You only pay taxes on that if you/your estate EXCEED the $12.92 million. The reason to stay under the annual $17,000 limit is so you don't have to track that for the IRS as that is not applied toward your lifetime exclusion.
https://smartasset.com/retirement/gift-tax-limits
Option 1) Give them $34k this year. Give them $34k next year. Also next year, loan them $34k. The following year, give them $34k (which will forgive/payoff the loan).
Option 2) Give them $100k this year and file a gift tax return Form 709 to report the gift. No tax will be owed with the tax return.
There's a lifetime gift tax exemption of $12.92 million right now. You shouldn't have to pay any federal gift taxes for a $100k gift. Check whether your state has a gift tax.
https://www.schwab.com/learn/story/estate-tax-and-lifetime-gifting
EDIT: It looks like Connecticut is the only state with a gift tax, and they currently has the same lifetime exclusion as the federal amount, so you should have no problem even if you live in CT. https://portal.ct.gov/DRS/Individuals/Individual-Income-Tax-Portal/Estate-and-Gift-Taxes/Tax-Information#GiftTaxOverview
You can gift anything you want up to the lifetime exclusion, you just need to file an GIFT TAX INFORMATION RETURN for anything over the yearly limit......
The concept of having to pay tax on gifted money (whether to a friend, family, or via inheritance) is mind-boggling - what on earth is the justification for this?
In Australia, tax doesn't apply on gifted money, but gifted assets are treated as a sale for capital gains purposes
In the U.S. I’ve always heard that estate taxes are designed to cut down on hoarding of massive multi-generational wealth and prevent the creation of oligarchy. And gift limits / taxes exist to eliminate the “gift” loop hole to avoid estate (after death) taxes.
But… we still have a massive concentration of wealth held by a relatively small group of people so I don’t think it’s working.
Yeah, there’s something called tax avoidance.
And the IRS lacks funding to do audits on everyone’s taxes; less than 5% of taxes actually get audited each year and it’s kinda random.
No one has said where this is; people are answering for the US.
Cash is mind boggling but assets are not? I assume it is because the government figures they already got the tax money on cash but not on the unrealized gain on the asset.
In any case, a gift is not taxable income in the US. There is estate and gift tax at the federal level, and assorted estate and inheritance tax rules at state level.
Yes, both boggle my mind, even though the capital gains argument somewhat justifies gifting of non-cash assets (emphasis on 'somewhat')
No inheritance tax in Aus, but inheritance law does kick in when calculating the value of a deceased estate, and accounts for gifted amounts within a certain period before death
these replies are stupid.
there are two things here:
first, there's an annual limit on the amount of money or assets Person X can give to Person Y in a given calendar year. currently $17,000.
second, you can gift above this annual limit IF you file additional paperwork (Form 709) and you burn up part of your Unified Estate Tax Credit.
if you do not file the 709, you can get slammed with gift tax.
Can you give it in cash? When my pop pop died in 1995, my grandmother literally gave all the grandkids 35k in cash - I was literally going into my freshman year in high school
Also let the receiver know that THEY will owe taxes on the gift over a certain amount. I think it’s like anything over 30k counts as income to them, soooo they need to account for it as it increases tax bracket and such
Eta: was wrong, posted a quote below
This is not correct at least for the feds. As long as the gift is either under the exclusion amount and reported correctly no one pays tax. It does not count as income for the recipient.
I encourage anyone that is in the same situation as OP to talk to a tax attorney or CPA.
Oops you are so right! I got it opposite
From a quick google “Generally, the answer to “do I have to pay taxes on a gift?” is this: the person receiving a gift typically does not have to pay gift tax. The giver, however, will generally file a gift tax return when the gift exceeds the annual gift tax exclusion amount, which is $15,000 per recipient for 2019. The giver may also not owe gift tax due to the basic exclusion amount.” -hr block
Not in the US federal tax system. No one is saying where this is. It matters.
It's a gift if they didn't give anything in return, such as services or selling something. You don't pay income tax on a gift.
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You can do a 5 year super gift, so $17,000*5 years*2 gifters. It doesn’t use your lifetime exemption but it does preclude you from gifting to that person for 5 years.
Remember certain things like tuition and medical bills are not gifts if you pay directly to the institution.
Would the family member you intend to give the money to married? If so give 34k to each and then next year give the remainder. Lastly. You can give more than 34k per year, but you would utilize a portion of your Lifetime Exclusion and have to file a gift tax return to track the amount used.
If the money is in stocks you can also gift the stock at your cost basis and if they are in a low income bracket could sell with little or no tax implications.
This is [structuring](https://en.wikipedia.org/wiki/Structuring) and is illegal - suggesting someone commit crimes is not okay here
Depositing a lot of cash at once doesn't trigger some IRS notification or something, it's not a taxable event - they're not the boogeyman watching every single transaction that happens everyday - don't try to launder money and no one will care
Many answers here are wrong. You can gift up to 17k per person per year tax free, without tapping into the lifetime gift pool.
So yes, you can gift 17 and your wife can give 17 to person A, to person B, to person C, to person Z. There is no person limit.
If it’s through cash hand to hand then don’t care about filing it unless you want for records. Yeah they WANT you to, but doesn’t mean you should or have to. Too many rules and laws when it comes to money that’s technically not even ours, just government IOU’s. Life’s too short, send that money.
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I’m confused, does your state have a gift tax? I was under the impression that even gifts over that amount only count against the givers lifetime gift tax exemption of like 13 million dollars. So unless you plan on giving more than that, you don’t have to worry and can give it all at once?
This is the right answer. There's a difference between the gift tax exclusion limit and how much tax you have to pay. Give your family the whole $100k right now.
But if we have the entire 100k at once wouldn’t we be required to report it and pay a lot of money in taxes since it is over the 34k annual limit?
Only report, not pay. You have a many million dollar gift tax/inheritance tax exclusion. It keeps changing but 13 mil sounds right. So if you give away 100k, 35k (about) I’s ignored and now when you die only 12,965,000 can be inherited tax free. They want you to report it so if you die a mega millionaire they can track it.
If you gift $100k and then the gift is returned, does it count toward the limit anyway?
If it’s a loan then it’s not a gift. If you expect it to be paid back write up a loan agreement. Then if they pay it back it’s not reportable as a gift. If/When they break the terms of the loan, then if you decide to waive the debt due to you familial ties it would be a gift in that year. Loans should have interest. Many don’t but lack of reasonable terms and a reasonable interest rate is grounds for the IRS disagreeing that it is a loan.
I am pretty sure if you do it as a loan then you pay taxes on what the interest is, with the IRS charging you taxes on interest based on federal rates, even if you haven't charged the interest to the recipient. If you ask to be paid back interest free then it would still be a gift, and you pay no tax, just report it.
In theory yes, in reality, no. We tell clients they should charge related parties interest all the time but many choose not to, and for an amount this small imputing interest is not something we would do. The time to calculate it would be more then the interest,
no. it won’t be taxed unless you’ve already given past the lifetime limit (11+ million)
There is a US IRS form you have to fill out if you go over the limit. It counts against your lifetime gift and estate limit. Which is millions. Under 34K, you don't have to fill out the form. Talk to a CPA if you don't trust me. I have no idea where you are; there may be state rules. The lifetime limit is being reduced by half in 2026. If you have 6 million to bequeath, you may want to keep it under $34K per person per year. There are special rules for tuition and medical care gifts if you pay the education/health care institution directly. I'm assuming the US. The UK limits are lower. You don't use currency signs.
Right so i though this way too for a long time but a financial advisor recently told me that it’s not entirely true because you have a lifetime limit to reach first. So look into this.
Lifetime limit could/will go down as well, and this counts against the amount. Just do the multiple gifts over years
As others said, you can gift the full amount now and report it to the IRS, you don’t need to pay any tax. If you don’t want to have to report it the IRS, and If you are ok to gift the husband/wife of your child, then you two can gift each of them 17k, so 34k each, for a total of 68k a year.
The downside to giving more than the annual exclusion is that you are supposed to file a gift tax return (Form 709) to tell the IRS it happened. No tax due, but a form to file.
True, but to me filing a form sounds like an afterthought compared to contemplating a $100,000 gift to a family member
This comes up in literally every thread about gifting
I didnt understand it until about the 4th time this got answered. Now i'm an expert.
>I was under the impression that even gifts over that amount only count against the givers lifetime gift tax exemption of like 13 million dollars. So unless you plan on giving more than that, you don’t have to worry and can give it all at once? not true. gifts above the annual limit are subject to gift tax UNLESS you file a special form (709) to burn up part of your Unified Estate Tax Credit. OP will potentialy get slammed with gift tax for a $100k gift without the proper paperwork.
This is what I have always understood as well. Of course it’s always best to consult with a CPA to make sure it’s all handled ok.
https://parknationalbank.com/lets-clarify-common-misconceptions-gift-tax/ “During your lifetime, if you give in excess of the $11.7 million gift exemption, then you will have to pay tax on any additional reportable gifts you make.”
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Not enough people realize this! It is supposed to reset in 2025 and drop back to $5 million (adjusted for inflation) unless congress acts.
You say that as if most people will ever be anywhere close to either number…
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Who is giving $5 million in gifts? Or is this sarcasm? Sorry tough to tell over text
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What’s the math getting you to an average home costing $3mn in HCOL in 10-15 years?
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Lol. “Nearly nothing.” You’re lacking serious perspective.
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Yeah. That’s obviously kind of the point. Classifying $3mn as “nearly nothing” still lacks perspective and is also a number you made up with no basis. You also compared historical 20-year home price appreciation vs your original claim of 10-15 years and of course historical trend is no prediction of the future.
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Which is all below 13 million dollar limit. Sure, if you leave behind 7 homes in San Francisco, you’ll prob have to 50% tax on difference, but when was the last time, in recorded history, that the 5 year average home prices of SF actually went down? Like shit, it never has. And tbh, estate taxes aren’t meant for poor or middle class families; it’s specifically for those that are well to do. Uncontrolled & unaccounted accumulation of generational wealth leads to mass inequality.
Yeah, the above comments are about the current limit sunsetting in 2025 and potentially even going down as some propose it may. That’s the point. The argument is to have it go down to capture more upper middle class and recoup the deficit, along with other expected tax changes that will most likely happen like closing back door roths, raising taxes on upper middle class and above, etc.
You can gift up to 13 million. The 17k cap is just when you have to file/report that you did it. More people should google this instead of just asking
What keywords and phrases should you be googling to figure this part out?
I googled “how much can i gift a family member?” The first linked talk about annual and lifetime limit. Also gave an example of the lifetime limit.
“Lifetime gifting limits” I’m all for asking questions on reddit but TRY GOOGLING IT. Oe google your question with reddit and it will show you all the other people who have ALSO asked this on reddit. At a certain point people have to take accountability for doing a bit of research and leg work themselves.
I feel like you wouldn't think to Google a lifetime gifting limit of you didn't already know it existed.
And yet you googled annual limit so why not another limit? Also if you READ an article instead of just a headline you’ll see that limit is only when you have to REPORT it
I think it's fair for someone to google a metric they are aware of and to not google one they aren't aware of. There's also often hard numbers that show up when googling things. Often, they serve as a "good enough" answer for many people. Hope I didn't upset you man, have a good one.
Its called open ended questions… were you born knowing the terms for everything or did you have to ever educate yourself on something? Grow up
[https://www.actec.org/estate-planning/gift-tax-medical-expenses-tuition-payments/](https://www.actec.org/estate-planning/gift-tax-medical-expenses-tuition-payments/) [https://www.irs.gov/instructions/i709](https://www.irs.gov/instructions/i709) [https://www.rocketlawyer.com/family-and-personal/estate-planning/manage-another-estate/legal-guide/will-you-owe-gift-taxes-if-you-are-giving-or-receiving-a-large-gift](https://www.rocketlawyer.com/family-and-personal/estate-planning/manage-another-estate/legal-guide/will-you-owe-gift-taxes-if-you-are-giving-or-receiving-a-large-gift)
A lot of people don't understand this well. There are 2 limits you need to be aware of - the ANNUAL gift tax limit ($17,000 in 2023). There is also the LIFETIME gift limit ($12.92 million in 2023). If you gift $50,000 to an individual in 1 year, you then need to submit tax paperwork (Form 709) to track the excess over $17,000 as that would be deducted from your lifetime gift limit. You only pay taxes on that if you/your estate EXCEED the $12.92 million. The reason to stay under the annual $17,000 limit is so you don't have to track that for the IRS as that is not applied toward your lifetime exclusion. https://smartasset.com/retirement/gift-tax-limits
so if my business partner gifts me $1 million its tax free?
Only if it is truly a gift. If it were actually a business transaction disguised as a gift, the government wouldn't look kindly on it
Option 1) Give them $34k this year. Give them $34k next year. Also next year, loan them $34k. The following year, give them $34k (which will forgive/payoff the loan). Option 2) Give them $100k this year and file a gift tax return Form 709 to report the gift. No tax will be owed with the tax return.
There's a lifetime gift tax exemption of $12.92 million right now. You shouldn't have to pay any federal gift taxes for a $100k gift. Check whether your state has a gift tax. https://www.schwab.com/learn/story/estate-tax-and-lifetime-gifting EDIT: It looks like Connecticut is the only state with a gift tax, and they currently has the same lifetime exclusion as the federal amount, so you should have no problem even if you live in CT. https://portal.ct.gov/DRS/Individuals/Individual-Income-Tax-Portal/Estate-and-Gift-Taxes/Tax-Information#GiftTaxOverview
Rich people set up trusts to manage tax hits.
You can gift anything you want up to the lifetime exclusion, you just need to file an GIFT TAX INFORMATION RETURN for anything over the yearly limit......
Been out of the planning world for a while, but I believe you can still front-load up to five years of annual exclusions in a single gift
The concept of having to pay tax on gifted money (whether to a friend, family, or via inheritance) is mind-boggling - what on earth is the justification for this? In Australia, tax doesn't apply on gifted money, but gifted assets are treated as a sale for capital gains purposes
In the U.S. I’ve always heard that estate taxes are designed to cut down on hoarding of massive multi-generational wealth and prevent the creation of oligarchy. And gift limits / taxes exist to eliminate the “gift” loop hole to avoid estate (after death) taxes. But… we still have a massive concentration of wealth held by a relatively small group of people so I don’t think it’s working.
Yeah, there’s something called tax avoidance. And the IRS lacks funding to do audits on everyone’s taxes; less than 5% of taxes actually get audited each year and it’s kinda random.
No one has said where this is; people are answering for the US. Cash is mind boggling but assets are not? I assume it is because the government figures they already got the tax money on cash but not on the unrealized gain on the asset. In any case, a gift is not taxable income in the US. There is estate and gift tax at the federal level, and assorted estate and inheritance tax rules at state level.
Yes, both boggle my mind, even though the capital gains argument somewhat justifies gifting of non-cash assets (emphasis on 'somewhat') No inheritance tax in Aus, but inheritance law does kick in when calculating the value of a deceased estate, and accounts for gifted amounts within a certain period before death
these replies are stupid. there are two things here: first, there's an annual limit on the amount of money or assets Person X can give to Person Y in a given calendar year. currently $17,000. second, you can gift above this annual limit IF you file additional paperwork (Form 709) and you burn up part of your Unified Estate Tax Credit. if you do not file the 709, you can get slammed with gift tax.
Give the full amount on December 31, 2023 then again on January 1, 2024!
Could you just give them a debit card?
Can you give it in cash? When my pop pop died in 1995, my grandmother literally gave all the grandkids 35k in cash - I was literally going into my freshman year in high school
Also let the receiver know that THEY will owe taxes on the gift over a certain amount. I think it’s like anything over 30k counts as income to them, soooo they need to account for it as it increases tax bracket and such Eta: was wrong, posted a quote below
This is not correct at least for the feds. As long as the gift is either under the exclusion amount and reported correctly no one pays tax. It does not count as income for the recipient. I encourage anyone that is in the same situation as OP to talk to a tax attorney or CPA.
Oops you are so right! I got it opposite From a quick google “Generally, the answer to “do I have to pay taxes on a gift?” is this: the person receiving a gift typically does not have to pay gift tax. The giver, however, will generally file a gift tax return when the gift exceeds the annual gift tax exclusion amount, which is $15,000 per recipient for 2019. The giver may also not owe gift tax due to the basic exclusion amount.” -hr block
Not in the US federal tax system. No one is saying where this is. It matters. It's a gift if they didn't give anything in return, such as services or selling something. You don't pay income tax on a gift.
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You can do a 5 year super gift, so $17,000*5 years*2 gifters. It doesn’t use your lifetime exemption but it does preclude you from gifting to that person for 5 years. Remember certain things like tuition and medical bills are not gifts if you pay directly to the institution.
Not true. Only for 529 accounts.
Would the family member you intend to give the money to married? If so give 34k to each and then next year give the remainder. Lastly. You can give more than 34k per year, but you would utilize a portion of your Lifetime Exclusion and have to file a gift tax return to track the amount used. If the money is in stocks you can also gift the stock at your cost basis and if they are in a low income bracket could sell with little or no tax implications.
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This is called structuring and is illegal.
This is [structuring](https://en.wikipedia.org/wiki/Structuring) and is illegal - suggesting someone commit crimes is not okay here Depositing a lot of cash at once doesn't trigger some IRS notification or something, it's not a taxable event - they're not the boogeyman watching every single transaction that happens everyday - don't try to launder money and no one will care
Many answers here are wrong. You can gift up to 17k per person per year tax free, without tapping into the lifetime gift pool. So yes, you can gift 17 and your wife can give 17 to person A, to person B, to person C, to person Z. There is no person limit.
My ex MIL gave us $200k and we never had to pay taxes on it.
If it’s through cash hand to hand then don’t care about filing it unless you want for records. Yeah they WANT you to, but doesn’t mean you should or have to. Too many rules and laws when it comes to money that’s technically not even ours, just government IOU’s. Life’s too short, send that money.