Every US citizen has what is known as the annual exclusion which allows the person to gift away up to whatever the current year amount is without either having to file an IRS Gift Tax Return or being subject to any tax.
The annual exclusion amount for 2019 is $15,000.00. That means an individual could make as many $15,000 gifts as he desires to different people and not be subject to any tax or have to file a gift tax return.
One of the key points with the annual exclusion is any property gifted under the exclusion does not count against the unified credit. Let me provide an example that may be helpful:
- A parent gifts the full annual exclusion amount in 2019 to each of their five children. That means the parent gifted $75,000 when all five gifts are added together. Since all of the gifts were within the annual exclusion amount the parent is not required to file a gift tax return.
- Additionally, the $75,000 does not count against the unified credit, which in 2019 is approximately $11.4 million.
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