@v4r3l4 wrote:
Hi @Opus 17 ,
So my spouse has to be a US citizen, not a US permanent resident. In order for us to be exempt from paying gift tax and or there being no limit to the amount I can gift my spouse?
And if shes not a US citizen, I'm only allowed to give her a total amount of USD $159,000 or less per year in order not to file form 709 and proceed without reporting anything to the IRS?
I'm just trying to make sure I'm understanding it correctly.
Thank you,
That appears to be the case based on the instructions to form 709, as well as IRC 2523
https://www.law.cornell.edu/uscode/text/26/2523
Note the numbers I gave before are for 2021. There has been an inflation adjustment for 2022.
https://www.irs.gov/pub/irs-drop/rp-21-45.pdf
While gifts to spouses are usually tax exempt, gifts to spouses who are not US citizens are not tax-exempt, but they receive an annual exclusion of $164,000. (If you read the code you will see the exclusion is shown as $100,000, that's the original law but there is an inflation adjustment and the current amount is $164,000.)
The code does not include green card holders under the category of citizen, even though green card holders (permanent residents) are almost always treated like citizens in other tax purposes. I can't tell when this particular section of the law was last revised, possibly 1981 or earlier.
Therefore,
You can give your spouse up to $164,000 this year and a form 709 is not required. If the gift is more than that, it must be reported, but no tax will actually be required unless your lifetime total of gifts is more than $12,060,000. Note that all these limits are revised every year for inflation and may change.
Also note, as you said "kids", you can give each child up to $16,000, in addition to the spousal exclusion of $164,000, without filing a gift tax return.
