In this month’s newsletter, we’re answering the most common questions we get about gifting. Before we get started though, remember that we are financial advisors (not your CPA). If you have specific questions about your personal situation, please reach out to your tax advisor.
How much can I gift without tax implications? What is the limit?
As per the IRS, the exclusion limit is $17,000 for any one donor. In other words, you can gift up to $17,000 in 2023 without having to do a Federal tax filing.
What if I gift over the limit?
If you give more than $17,000, you have to do a simple tax filing. There are no taxes paid on your gift until the amount exceeds $12.92 million. If you were to gift more than this amount, you would start to reduce your lifetime gift/estate tax exemption.
Are there any exceptions to this gifting limit?
Yes. There are two exceptions:
- Paying someone else’s medical bills
- Paying for someone else’s education
You can gift without limit in either of those two situations. The person does not have to be a direct relative.
Enjoy giving! Please reach out with any questions on gifting or other year-end financial matters.
IRS.gov. Frequently Asked Questions on Gift Taxes. https://www.irs.gov/businesses/small-businesses-self-employed/frequently-asked-questions-on-gift-taxes