How Much Can You Gift

If you want to make lifetime gifts to your children, you are not limited to $15,000 per person. In 2022, you can gift more than $12M.

Many people think they can only gift $15,000 per year per person. They are referring to the annual estate tax exemption (which for 2022 is now $16,000).

You can actually gift way more that without incurring a gift tax.

The 2022 gift and estate tax exemption is $12,060,000. Just like the name implies, this is the GIFT and ESTATE tax exemption.  The exemption is a combination of lifetime gifts and estate value. As an example, you can gift $6,000,000 to your kids during your lifetime and then leave $6,000,000 at your death with no tax. The total of your lifetime gifts plus your estate value at your death is $12,000,000, less than $12,060,000, therefore no tax.

When you make lifetime gifts, it eats into your gift and estate tax exclusion. Gift $1,000,000, then you can die with $11,060,000 with no tax.

The $16,000 annual gift exclusion is a twist on this concept. The annual gift exclusion is a freebie that doesn't eat into your gift and estate tax exemption.  

If you gift $16,000 to your daughter, you will still have the full $12,060,000 gift and estate tax exemption. In fact, you can gift $16k to as many people as you want, and it won't eat into your gift and estate tax exemption.

With the current gift and estate tax exemption, most of our clients will not have to worry about making gifts. 

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