The federal gift tax annual exclusion for 2024 is $18,000 per person per year

You can give up to $18,000 to any one person in a calendar year without filing a gift tax return or using any of your lifetime exemption. This amount resets on January 1 each year. If you give more than $18,000 to a single person in one year, you must file Form 709 (the gift tax return) with the IRS, even if you owe no tax.

The $18,000 figure is the 2024 amount and changes most years based on inflation. The IRS announces the new limit in October for the following year. In 2023 it was $17,000; in 2022 it was $16,000. Check the IRS website or your tax preparer for the current year's limit before you give large gifts.

The annual exclusion applies per recipient, not per giver. If you are married, you and your spouse can each give $18,000 to the same person in the same year, for a combined $36,000, without either of you filing a return or reducing your lifetime exemption.

Key Takeaways

  • You can give $18,000 per person per calendar year in 2024 without filing a gift tax return or using your lifetime exemption.
  • Gifts to spouses and to charities are unlimited and never count against your exemption, regardless of amount.
  • If you give more than the annual limit to one person, you file Form 709 but usually owe no tax unless you have already used your lifetime exemption.
  • The annual exclusion amount changes yearly with inflation, so verify the current limit before making large gifts.
  • Paying someone's tuition or medical bills directly to the provider does not count as a gift and has no limit.

Gifts that do not count against your annual exclusion

Certain gifts are unlimited and never reduce your $18,000 annual exclusion or your lifetime exemption. Gifts to your spouse (if your spouse is a U.S. citizen) have no limit. You can give your spouse $500,000 in one year and file no return.

Gifts to registered charities also have no limit. A $100,000 donation to a nonprofit counts as zero against your annual exclusion. Tuition and medical expenses paid directly to the school or medical provider do not count as gifts at all. If you pay your grandchild's college tuition directly to the university, or pay a hospital bill directly to the hospital, neither amount counts toward your annual limit, no matter how large.

Gifts to political organizations and candidates are also unlimited. Payments for someone else's mortgage, car loan, or other debts do count as gifts unless you are the legal obligor on the debt.

What happens if you exceed the annual limit

If you give more than $18,000 to one person in a year, you must file Form 709 with your tax return. Filing the form does not mean you owe tax. Instead, the excess amount is deducted from your lifetime exemption, which is $13.61 million in 2024 (this figure also changes yearly).

Most people never owe gift tax because the lifetime exemption is so large. You would have to give away more than $13.61 million over your entire life to owe any tax. However, your lifetime exemption is also used when you die: if your estate exceeds the exemption amount, your heirs pay estate tax on the overage. Gifts you make during life reduce the exemption available to your estate.

If you give $25,000 to your adult child in 2024, you file Form 709 showing the $7,000 overage. That $7,000 is subtracted from your $13.61 million lifetime exemption. You owe no tax unless and until your total lifetime gifts plus your estate exceed $13.61 million.

Gifts to minors and trusts

Gifts to minors count the same way as gifts to adults: $18,000 per child per year in 2024 is excluded. A gift to a minor is usually made through a custodial account (a UTMA or UGMA account) or a trust. The annual exclusion still applies.

If you want to give money to a minor but ensure it is not spent until they are older, you can use a trust. A properly structured trust can still may have access to for the annual exclusion, meaning you can give $18,000 per beneficiary per year without filing. However, the trust document must meet specific IRS requirements. Consult a tax attorney or CPA if you plan to use a trust for gifts to minors.

Gifts from non-U.S. citizens

If you are not a U.S. citizen, the annual exclusion is lower: $18,000 in 2024 if you are a resident alien for tax purposes, or $100 if you are a nonresident alien. Nonresident aliens also cannot give unlimited gifts to a spouse unless the spouse is a U.S. citizen.

If you are a green card holder or have lived in the U.S. long enough to be treated as a resident alien, you use the standard $18,000 exclusion. Your immigration status and tax residency status determine which rule applies. Consult a tax professional who handles international tax issues if you are not a U.S. citizen.

Reporting gifts on your tax return

If you stay within the annual exclusion ($18,000 per person in 2024), you do not file any form or report the gift anywhere. You simply give the money or property and keep no record with the IRS. The recipient also files no form and reports no income.

If you exceed the annual limit for any recipient, file Form 709 (United States Gift Tax Return) with your federal tax return for that year. Form 709 is filed with your Form 1040, not separately. You do not owe tax unless your lifetime gifts exceed your lifetime exemption, but the IRS requires the form to track your exemption usage.

Frequently Asked Questions

Can I give my adult child $20,000 without owing tax?

You can give $18,000 in 2024 without filing a return. The extra $2,000 requires you to file Form 709, but you owe no tax. The $2,000 is deducted from your $13.61 million lifetime exemption. Unless you give away more than $13.61 million in your lifetime, you will never owe gift tax.

If I give my parent money to help with their mortgage, does that count as a gift?

Yes, unless you are legally obligated to support them. A voluntary payment to help with their mortgage counts as a gift and counts toward your $18,000 annual exclusion. If you are their legal dependent or have a court order to support them, it may not count as a gift. Consult a tax professional about your specific situation.

What if my spouse and I give $40,000 to our son in one year?

Each of you can give $18,000 in 2024 for a combined $36,000 with no return required. The extra $4,000 requires you both to file Form 709, but you owe no tax. The $4,000 is split between your two lifetime exemptions. You would each have $13.605 million remaining.

Do I owe income tax on money I receive as a gift?

No. The recipient of a gift does not report it as income and owes no income tax. Gift tax is paid by the giver, not the receiver. The only exception is if the gift generates income after you receive it—for example, if someone gives you a rental property, you owe income tax on the rent it produces.

Does paying someone's medical bill directly to the hospital count as a gift?

No. Payments for tuition and medical care made directly to the provider have no limit and do not count as gifts. You can pay a $500,000 hospital bill directly to the hospital with no gift tax consequences. The payment must go to the school or medical provider, not to the person receiving the care.