How much money can you gift without taxes?

[WinterDeere]

One of the exemptions is that the gift beyond the $19K limit can essentially be a loan against the estate. As long as the estate is less than $14M, or whatever it is when the person passes on, then one is OK. Although there may still be some state taxes owed.

If true, I'm assuming there would be some other form to file alongside the #709 gift tax form?

#709 is only needed in years where you cannot break the total gift down below the $19k per giver per receipient threshold.

 

[RSKY]

One of the exemptions is that the gift beyond the $19K limit can essentially be a loan against the estate. As long as the estate is less than $14M, or whatever it is when the person passes on, then one is OK. Although there may still be some state taxes owed.

There is a letter typed up and put in our bank safe deposit box stating that when our two daughters divide up our estate one gets the amount we are gifting to her deducted from her share. This may have no legal standing but the daughter insisted on it. In the past when one of the two needed some help we gave the same amount to the other one. But the youngest and her spouse now have increased their income to the point they will not need any help from us again. They are also setting money back for their (early) retirement. The oldest daughter's husband had his employer close the shop he had worked at for years. He had attended every training class offered, could do any job they had, and looked forward to retiring from that company. They gave him a choice that included a big raise to move across the country to another shop but they didn't want to move. So he lost his job. Took him a few years to recover but he now has been promoted several times and takes all the overtime he can get. The initial request from my daughter was how to go about taking money out of his 401K. That is their retirement and I will not allow that while I am able to supply cash to tide them through a rough patch. Thus we are gifting them money.


RSKY

 

[masseyrider]

I don't gift anything.
It's a personal loan. I just didn't get paid back.
Poor judgement on my part.

 

[WinterDeere]

There is a letter typed up and put in our bank safe deposit box stating that when our two daughters divide up our estate one gets the amount we are gifting to her deducted from her share. This may have no legal standing but the daughter insisted on it. In the past when one of the two needed some help we gave the same amount to the other one. But the youngest and her spouse now have increased their income to the point they will not need any help from us again. They are also setting money back for their (early) retirement. The oldest daughter's husband had his employer close the shop he had worked at for years. He had attended every training class offered, could do any job they had, and looked forward to retiring from that company. They gave him a choice that included a big raise to move across the country to another shop but they didn't want to move. So he lost his job. Took him a few years to recover but he now has been promoted several times and takes all the overtime he can get. The initial request from my daughter was how to go about taking money out of his 401K. That is their retirement and I will not allow that while I am able to supply cash to tide them through a rough patch. Thus we are gifting them money.


RSKY

It’s good you’re fortunate enough to be able to help them. And always better to move as much as you can while you’re still on this side of the grass, to avoid inheritance taxes.

And pay attention next time you vote, as this has been a big part of the presidential platforms the last several elections. One candidate above all others, was REALLY trying to lower the threshold amounts where inheritance taxes skip up to 50% and 60%, to the point where every successful shop owner or working professional might be affected.

Put otherwise, no matter how much I might dislike the opposition, they will always get my vote over another who wants to take the money I have socked away for my kids and grandkids.

 

[John_Mc]

As others have mentioned, per the IRS, the annual exclusion for gifts is $19,000 for 2025. You can give this to someone without triggering any tax consequences for either you or the recipient. Your spouse can also give $19,000 to that same person. You can also each give that same amount to that person's spouse. So if both you and the recipient are married your family could conceivably transfer up to $76,000 to their family in one year with no tax consequences.

As I understand it, it does not even have to be a spouse, it could be their child, brother/sister, or just a trusted friend.

You'll probably want to verify this yourself with the IRS or some tax professional, but I know of people did exactly this - at the advice of a tax professional - when transferring some of their estate to their kids as they got older and it became apparent they would not need all of their savings (the estate tax exemption was significantly smaller back then than it is now.)

 

[John_Mc]

I don't gift anything.
It's a personal loan. I just didn't get paid back.
Poor judgement on my part.

Your "loan" could easily be deemed a gift by the IRS. I suppose the odds of getting caught might be slim (though transactions over a certain amount - I think $10K?? - are all reported to the government so there is some chance you'd get caught if you were ever audited.)

Years ago, my parents loaned my brother money for a down payment on his house. He ended up paying them back in full with interest (which was minimal), but they were advised by their tax advisor that they could forgive an amount up to the max annual gift exclusion each year until the loan was eventually zeroed out. The key was not to exceed that limit in any one year for the value of any gifts given to him.

 

[WinterDeere]

Your "loan" could easily be deemed a gift by the IRS.

I believe it is. We did this once, $100k from parents when we purchased our house, just a short swing loan until we could sell our prior house and repay them. In our case, it took less than two months and was contained to a calendar year, but I remember the mortgage company and real estate attorney advising us that this would have to be documented as a "gift" for the sake of tax purposes, in case we were not able to pay back inside the calendar year.

 

[John_Mc]

I believe it is. We did this once, $100k from parents when we purchased our house, just a short swing loan until we could sell our prior house and repay them. In our case, it took less than two months and was contained to a calendar year, but I remember the mortgage company and real estate attorney advising us that this would have to be documented as a "gift" for the sake of tax purposes, in case we were not able to pay back inside the calendar year.

Alternatively, your parents could have just charged you interest, and the loan could have been kept open for longer than that calendar year. The IRS has guidelines on what the minimum interest rate is that can be charged and not have it be considered a gift. (That minimum varies depending on the prevailing interest rate.) My parents followed this guidance. They could have just not charged interest, but the amount that should have been charged would be considered a gift. They were also concerned that not charging interest might be a red flag to the IRS that the whole thing was a gift.

 

[RSKY]

Here is another reason for the gift.

YTD 1 Yr 3 Yr 5 Yr 10 Yr

Fidelity® Select Semiconductors Portfolio (FSELX)

Technology

+36.97%

+38.22%

+55.03%

+34.08%

+30.81%

This is the main Mutual Fund that I'm invested in. Price per share dropped below $23 in April and has touched $43 so far this month. All my planning was for it to hit $40 by the end of the year and now I expect at least $45 if not higher. This is generational wealth and why not give some of it to my heirs. Daughters and their spouses work HARD and put so much effort into taking care of my grands so I will help them all I can.