Limit on parent donation to children, and tax on amount over limit, and IRS reference?

[IsabellaG · Accepted solution]

The Gift Tax  is calculated on giving a lifetime's worth of gifts of more than $5.49 million. 

You would need to file a Gift Tax Return, Form 709,   if you gave any one person more than the annual exclusion amount. The annual exclusion for 2014, 2015, 2016 and 2017 is $14,000. For 2018 it's 15,000. Married couples are each allowed the exclusion amount for gifts.

The following gifts are not taxable gifts:

1. Gifts that are not more than the annual exclusion for the calendar year.
2. Tuition or medical expenses you pay for someone (the educational and medical exclusions).

See this IRS information on Gift Tax.