Gifting $65k: A Taxing Question for Your Daughter and Her Husband

As a parent, you may want to share your wealth with your children and their spouses to help them build a better future. However, before you make a significant gift, it's essential to understand the tax implications. This article explores the potential tax consequences when gifting $65,000 to your daughter and her husband.

First, let's understand the annual gift tax exclusion limit. In 2024, the annual exclusion for gifts is $18,000 per recipient. If you gift $65,000 to your daughter and her husband, the amount exceeding this limit is $33,000 ($65,000 - $36,000). This means you will have to pay taxes on the excess amount.

The tax implications of gifting $65k to a married couple depend on how the gift is divided between them. If the gift is split equally, with each spouse receiving $32,500, only $14,500 per spouse would exceed the annual exclusion. In this case, the couple would need to file a gift tax return (Form 709) and use a portion of their lifetime exclusion ($13.61 million per person in 2024). However, if the gift is below the annual exclusion, no tax or reporting is required.

The lifetime exclusion limit also plays a role in the taxability of the gift. In this case, the $65,000 gift to your daughter and her husband would exceed the annual exclusion amount. You would need to file a gift tax return (Form 709) and track the amounts given each year. However, since the gift would not exceed the lifetime exclusion limit, no gift tax would be due. The excess amount ($29,000) would reduce your lifetime exclusion.



Another factor to consider is the time frame before the donors' death. According to current tax laws, if the donation is made within 7 years before the donor's death, it falls under the category of "potentially exempt transfers." This means the gift may be subject to inheritance tax if the donor dies within 7 years. However, if the donor lives beyond 7 years, the gift is not taxed.

In conclusion, gifting $65,000 to your daughter and her husband can have tax implications depending on how the gift is divided and the time frame before the donors' death. It's essential to consult with a financial advisor or tax professional to understand the specific implications of your gift and plan accordingly. By doing so, you can help ensure that your gift is received with gratitude and minimizes any potential tax burden.