Don’t Forget the Basics: Annual Exclusion Gifts

The annual exclusion gift amount remains at $15,000 for 2019. The annual exclusion gift is the amount that you can give to any recipient during the calendar year without gift tax consequence. For example, in 2019, if husband and wife have two children, they each can give $15,000 to each child, total of $60,000. Upon their deaths, they could still leave $22.8 million – $11.4 per person – to their children without any federal estate tax. (State estate tax may differ.) If gifts exceed the annual exclusion, the transfer would erode the $22.8 million exemption they can pass tax-free upon their deaths. There generally is no tax reporting regarding the annual exclusion, however, there are exceptions depending on the type of gift and the recipient. If the law changes and the $22.8 million exemption is reduced by changes in the law, annual exclusion gifts will become even more important.