Skip to Main Content


Login Menu
Loading Branch
Looking for a location near you?

Simply click the target to find your nearest banking office or enter your ZIP code and press search.

Let’s clarify some common misconceptions about the gifting tax

While estate planning, questions often arise about making monetary gifts to others. Some questions we hear frequently are: How much of my money can I give away each year? What tax consequences are there for gifting? Does the recipient have to pay tax on the gift received?

The Internal Revenue Service has very specific rules for gifting that can be beneficial to the giver when used properly. In 2018, an individual can gift up to $15,000 per recipient, per year without having to file a Form 709 gift tax return. A married couple may give $15,000 each or $30,000 total per recipient, per year. The annual gift amount is subject to adjustment, so you might want to check the IRS website or contact your tax professional or accountant for the current annual gift amount.

There are no limitations on how much you can give someone. However, if you give more than $15,000 per person, then it becomes a reportable gift and the giver will have to file Form 709 for that year to report any amount exceeding $15,000.

A common misconception is that someone has to pay tax on the amount recorded on a 709 gift tax return. In reality, it just gets counted against, and reduces, the federal estate tax exemption amount of the giver. In 2018, this amount is $11.18 million per individual.

Let’s say you gift $1 million over the annual gift exclusion amount throughout your lifetime. At your death your federal estate tax exemption amount would be reduced to $10.18 million from $11.18 million since the gift tax and estate tax exemptions are intertwined. Your estate would be responsible for paying tax at a 40% rate on the assets exceeding $10.18 million. During your lifetime, if you give in excess of the $11.18 million gift exemption, then you will have to pay tax on any additional reportable gifts you make. You may wish to contact your tax professional or accountant for help and to answer any questions you might have.

A deceased spouse can pass their unused estate tax exemption to their surviving spouse. This means the survivor can potentially have a maximum of $22.36 million of estate tax exemption at death, as long as there were no taxable gifts reported on Form 709.

While seemingly complex, the basis of the gifting rules is pretty cut and dried. Give no more than $15,000 per person, per year and you don’t have to worry about filing a gift tax return or decreasing your allotted federal estate tax exemption amount. Regardless of the amount, the recipient does not have to pay tax on the gift received.

For more information on gifting and your other estate planning options, contact our Trust Department.

Previous Post: 12 things you need to be ready to purchase a home Learn More

Next Post: What happens if I die without a will? Learn More

Related Topics:
Ready to get started?
Contact Us Anytime 937-324-6800
Debit card or mobile wallet? What you value determines your preference.

Is there a right or wrong way to pay? Does it really matter if you…

Learn More

The Fiduciary Rule, which forces investment advisors to a higher standard, has an uncertain future

The good news if you invest through us: Our already high standards will remain The…

Learn More

Mobile app banking: You don’t have to give up safety for convenience

In the Park National Family of Community Banks, a majority of our clients do their…

Learn More