How much money can I gift to someone?
Updated: Dec 3, 2019
A lot of clients ask: How much money can I gift to someone?
Answer: In 2019 & 2020, you can gift $15K, to one person, without filing a gift tax return and without paying gift taxes. It's not income because the gift recipient didn't sell a good or perform a service, so there's no income tax due from the gift recipient.
If you gift $16K, to one person, you'll file a gift tax return, and you still won't pay gift taxes yet. That $1K overage counts towards a lifetime exemption amount of $11.4M in 2019 ($11.58M in 2020) for the feds and $3.6M in 2019 for CT ($5.49M in 2020 for CT). You'll pay gift taxes only after all of your yearly gift overages (the $1K over the $15K) add up to more than the lifetime exemption amount ($3.6M in 2019 for CT).
If you're worried about triggering the gift tax, you could gift to several people that you might expect to benefit from the money. Like gifting $15K your daughter, then $15K to her husband, then $15K to her three kids, each. If the gift giver is married, then your yearly and lifetime exemptions are doubled. So a married couple could give $30K to their daughter, then $30K to her husband, then $30K to her three kids, each. These gifts could be seen as coming from 2 people; each spouse gets a $15K per person per year exemption.
Finally, gifts to paid to charities, political organizations, or gifts paid on behalf of someone directly to a school or doctor are non taxable.