The IRS Annual Gift Exclusion will increase from $17,000 to $18,000 for the 2024 calendar year. The annual exclusion amount is the amount that any individual can gift to any other person per calendar year without paying any gift taxes or even being required to file a gift tax return. Any amount over the limit may be subject to gift taxes and require a gift tax return to be filed.
Additionally, the IRS has increased the lifetime estate and gift tax exemption to $13.61 million per person for 2024. This is the amount of lifetime gifts an individual can make without paying any gift taxes. Any gifts made during the year that exceed the exclusion limit of $18,000 will be applied towards the lifetime exemption amount by reducing it dollar for dollar.
Strategies to avoid gift taxes can include gift splitting, spreading the gifts over multiple years, and/or paying institutions directly such as for tuition or medical expenses. Proper planning can help simplify gifting strategies and potentially simplify the tax filing process.
As a reminder, completed gifts are irrevocable. Therefore, it is important to review all options and consulting with a tax professional when considering gifting strategies as completed gifts cannot be undone after the fact.