Gift tax

[Noah930]

Asking for a friend (really)....

Annual gift exemption in the eyes of the IRS is $19,000. I know of one person, who wants to gift a family member more than that ($25K). Well, that's gonna trigger a gift tax.

OK, but perhaps the gift can be split into two: $12.5K for one person, and $12.5K for the person's spouse. That avoids any gift tax, right?

But still, isn't there some single-transaction dollar amount by which a bank/financial institution has to notify the IRS? Even if someone is gifted less than $19K, a check that large will trigger bank-to-IRS notifications, correct? Is it better to make multiple checks for smaller amounts to avoid that type of IRS attention? Would 4 checks for $6K (split amongst 2 recipients) be better than two large ones (to those same 2 people) for $12K?

[SpyderMike]

I have done several such gifts...some much larger. We did split husband and wife like you suggest for amounts over the single person annual limit. We also timed them near end of year and beginning of next for ones about twice as large. Then we realized that no one is documenting them for the IRS so we just track them on a spreadsheet as part of our lifelong exemption should we get audited.

We did gift a plane to a college aerospace program that was a charitable donation and that required documentation.

[KFC911]

Methinks the bank/IRS "trigger flag" is still 10K, but I just paid cash for a new (to me) car from a dealer ... no biggie. I've done cash exchanges with relatives above 10K a few times ... sometimes a lot more... but still nickle & dime stuff.

Me ... I'd withdraw the cash and hand it to them .... no paper trail other than your withdrawal (over 10K) ... or withdraw in multiple transactions below that.

I do nothing illegal, but 25K is nothing ... if it triggers a "flag" ... they just FIRED anyone who might have cared .

A string of 8K withdrawals might do it too ...

I just don't worry about it ... and would explain if asked ... but I'm just not on their radar.

$19K?

Here ... enjoy it!

It's a "loan" ... pay it back when you want too... $1 per year minimum

My dad & I have never even shook hands ... and now we're busted

[cabmandone]

Originally Posted by Noah930

Asking for a friend (really)....

Annual gift exemption in the eyes of the IRS is $19,000. I know of one person, who wants to gift a family member more than that ($25K). Well, that's gonna trigger a gift tax.

OK, but perhaps the gift can be split into two: $12.5K for one person, and $12.5K for the person's spouse. That avoids any gift tax, right?

But still, isn't there some single-transaction dollar amount by which a bank/financial institution has to notify the IRS? Even if someone is gifted less than $19K, a check that large will trigger bank-to-IRS notifications, correct? Is it better to make multiple checks for smaller amounts to avoid that type of IRS attention? Would 4 checks for $6K (split amongst 2 recipients) be better than two large ones (to those same 2 people) for $12K?

One person can gift the max to their child and the spouse of the child so 38K. If the person gifting has a spouse, both can gift the max to the child and their spouse so 76K.

Oh yeah, there's also a lifetime exemption amount.

And in case you're wonding "Is he right?"
"For married couples, each spouse may give away $19,000 tax-free in 2025. This would allow each spouse to combine their $19,000 limit to give up to a total of $38,000 to each of their gift recipients in 2025."

[greglepore]

First of all, there isn't a "gift tax" for most normal folks. The annual amount is the amount you can give that doesn't trigger an IRS form 709 report. All that such a report does is provide a record against your lifetime estate tax exclusion amount (14 mil this year, likely rolling back to 5 mil in 2026). The recipient pays no tax either way. The tax, if any, is the donor's, and only as part of his estate if he exceeds the lifetime limit.

All that this does is prevent rich folks from giving stuff away just before death to avoid estate tax.

"Stucturing" payments to evade the 10k bank reporting limit is a crime and the dumbest idea of the century given the above.

[KFC911]

Greg ... tell me why I can't "loan" my dad 25K and if he pays it back .... IDGAF?

Regardless .... I do and have done stuff like that all my life.

I also moved $50B per day through the Federal Reserve System decades ago

No one should ever listen to me tho'

My dad also "gave" me firearms when I was a teen.... don't tell BATF either

[greglepore]

You can do that all you want.
My only point was that a series of under 10k transactions with the intent to avoid the 10k deposit report is really uncalled for given there's no "gift tax" if your net worth is under 13 mil (or 5 mil depending on the exclusion year).

Again, no such thing as a gift tax. Anything over the annual amt just counts against your lifetime estate tax exclusion of 13 million currently.

[KFC911]

I don't think my parents were ever gonna spend their inheritance I intend to leave them ... but I get yer point .

I don't jump thru mini-hoops ... I just don't... I do me.

[MichaelGarcia]

First of all, there isn't a "gift tax" for most normal folks. The annual amount is the amount you can give that doesn't trigger an IRS form 709 report. All that such a report does is provide a record against your lifetime estate tax exclusion amount (14 mil this year, likely rolling back to 5 mil in 2026). The recipient pays no tax either way. The tax, if any, is the donor's, and only as part of his estate if he exceeds the lifetime limit.

All that this does is prevent rich folks from giving stuff away just before death to avoid estate tax.

"Stucturing" payments to evade the 10k bank reporting limit is a crime and the dumbest idea of the century given the above.

Thank you so much for the info.