What are the tax implications of giving gifts?

What are the tax implications of giving gifts?

When you give a gift, it may be subject to gift tax. In the U.S., you can give up to $17,000 per person per year without any tax implications.

What if I give more than that amount?

If you give more than the annual exclusion amount, you may need to file a gift tax return. However, you won't necessarily owe taxes unless your total gifts exceed the lifetime exemption.

What is the lifetime exemption limit?

As of 2023, the lifetime gift tax exemption is $12.92 million. This means you can give away that amount over your lifetime without incurring gift taxes.

Are there any exceptions to these rules?

Yes, certain gifts are exempt from taxes, such as gifts to your spouse, medical expenses, and educational expenses paid directly to the institution.