How Much Can I Give My Kids Before Paying IRS Gift Tax?

This is a common question that I get asked a lot, and the answer may surprise you. There is actually no limit on how much you can give to your kids or any other individual. Watch this video for a breakdown of the IRS gift tax rules & regulations for 2024 and 2025.

The Annual Gift Tax Exclusion

The first thing to understand is the annual gift tax exclusion. In 2024, the exclusion amount is $18,000 per person. This means that you can give up to $18,000 to each of your children (or anyone else) every year without having to report it to the IRS. So, for example, a married couple could give each of their children $18,000 for a total of $72,000 in 2024 without any tax consequences.

The Lifetime Gift Tax Exemption

There is also a lifetime gift tax exemption. This is the total amount of money that you can give away over your lifetime without having to pay gift tax. In 2024, the exemption amount is $13.61 million. This means that you can give away up to $13.61 million in your lifetime without owing any gift tax. If you are married, you and your spouse can combine your lifetime exemptions for a total of $27.22 million in 2024.

Reporting Gifts

If you give more than the annual exclusion amount to any one person in a year, you are required to file a gift tax return (Form 709) with the IRS. However, this doesn’t necessarily mean that you will owe any gift tax. The filing is simply to inform the IRS of the amount of the gift so that it can be tracked against your lifetime exemption.

Gift Tax vs. Estate Tax

It’s important to distinguish between gift tax and estate tax. Gift tax is a tax on gifts that you make during your lifetime. Estate tax is a tax on your assets that you leave behind after you die. The lifetime gift tax exemption also applies to your estate tax exemption. This means that any gifts that you make over the lifetime exemption amount will reduce the amount that you can leave to your heirs without owing estate tax.

Planning for Gifts

There are a number of strategies that you can use to minimize your gift tax liability. For example, you can make multiple small gifts to different people instead of one large gift to one person. You can also give gifts of assets that are expected to appreciate in value, such as stocks or real estate. This way, you can transfer wealth to your heirs without using up your lifetime exemption.

Speak to an Advisor

It is important to speak to a tax advisor to discuss your specific situation and develop a gifting plan that meets your needs. A tax planner or financial advisor can help you understand the tax implications of giving gifts and develop strategies to minimize your tax liability. Learn more tips and strategies about how to pay less taxes in retirement with my free retirement planning guidebook.

• How Much Can I Give My Kids Before Paying IRS Gift Tax? – Mr. Retirement YouTube
• PayLessRetirementTaxes.com
• Free Retirement Planning Guidebook: https://keilfp.com/pay-less-retirement-taxes/#guidebook
• 3 Things You Should Know Before Choosing A Financial Advisor
• 7 Questions That Could Make or Break Your Retirement
• Free Retirement Video Course: Your 5 Step Retirement Income Plan

• Subscribe to Retirement Revealed on Google Podcasts
• Subscribe to Retirement Revealed on Apple Podcasts

Connect With Jeremy Keil:

• Mr. Retirement YouTube Channel
• LinkedIn: Jeremy Keil
• Facebook: Jeremy Keil
• LinkedIn: Keil Financial Partners

Disclosures

This material is provided for informational purposes only and is not solely intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. The views and strategies described may not be suitable for all investors. They also do not include all fees or expenses that may be incurred by investing in specific products. Past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. You cannot invest directly in an index. The opinions expressed are subject to change as subsequent conditions vary. Advisory services offered through Thrivent Advisor Network, LLC. 

IMPORTANT: Advisory Person(s) may use proprietary financial planning tools, calculators and third-party tools and materials (“Third-Party Materials”) to develop your financial planning recommendations. The projections or other information generated Third-Party Materials regarding the likelihood of various investment outcomes are hypothetical in nature, do not reflect actual investment results, and are not guarantees of future results. Results may vary with each use and over time. Thrivent Advisor Network, LLC and its advisors do not provide legal, accounting or tax advice. Consult your attorney and or tax professional regarding these situations.

The return assumptions in Third-Party Materials are not reflective of any specific product, and do not include any fees or expenses that may be incurred by investing in specific products. The actual returns of a specific product may be more or less than the returns used. It is not possible to directly invest in an index. Financial forecasts, rates of return, risk, inflation, and other assumptions may be used as the basis for illustrations. They should not be considered a guarantee of future performance or a guarantee of achieving overall financial objectives. Past performance is not a guarantee or a predictor of future results of either the indices or any particular investment. Investing involves risks, including the possible loss of principal.

This communication may include forward looking statements.  Specific forward-looking statements can be identified by the fact that they do not relate strictly to historical or current facts and include, without limitation, words such as “may,” “will,” “expects,” “believes,” “anticipates,” “plans,” “estimates,” “projects,” “targets,” “forecasts,” “seeks,” “could’” or the negative of such terms or other variations on such terms or comparable terminology. These statements are not guarantees of future performance and involve risks, uncertainties, assumptions and other factors that are difficult to predict and that could cause actual results to differ materially.

Advisory Persons of Thrivent provide advisory services under a “doing business as” name or may have their own legal business entities. However, advisory services are engaged exclusively through Thrivent Advisor Network, LLC, a registered investment adviser.  Keil Financial Partners and Thrivent Advisor Network, LLC are not affiliated companies.