The IRS allows individuals to give up to $18,000 in gifts per person in 2024 without having to report it or pay taxes on the amount. This means that a couple can give up to $36,000 to their child from a joint account with no tax consequences. Certain types of payments are not considered gifts, such as money given from a husband to a wife or payments made directly to educational or medical institutions on behalf of someone else.
For example, a grandparent can pay for their grandchild’s college tuition without it being subject to gift tax rules. If a gift exceeds the annual limit, the giver is responsible for filing a gift tax return using IRS Form 709. This form tracks lifetime gifts given by the donor, but the recipient faces no tax consequences.
However, if the gift is an appreciated investment, the recipient assumes the giver’s cost basis and may be liable for capital gains when the asset is sold. Reportable gifts count against the unified estate tax exclusion, which is currently $13.61 million for an individual.
Irs 2024 gift tax guidelines
Most taxpayers are unlikely to reach this limit, so they do not face any gift or estate tax issues. The value reported on the gift tax form is the fair market value of the property at the date of transfer. Cash payments are easily determined, while other items like real estate or businesses may require an appraisal to establish a fair market value.
It is important to note that there is no tax deduction for the donor or taxable income for the recipient of these gifts. Gifts to family members or friends are not the same as charitable contributions to qualified 501(c)(3) organizations, which do qualify for a tax deduction. In most cases, there are no tax-reporting or tax-paying implications when gifting to family and friends.
Understanding the high limits and that most people are not impacted by these rules is key. Be generous this holiday season, but remember that unless you are donating to a qualified charitable organization, there are no tax consequences to worry about.
