Should you use lifetime gift exclusion now or save it for later

[Taxpuzzle]

If you give someone more than $15k this year, should you use the lifetime gift exclusion to avoid paying tax this time, or should you pay the tax and save the exclusion for later?

Also, if you lose track of how much of the lifetime gift exclusion you have used up, can you ask IRS to tell you?

[Tabby1843]

You will need to file Form 709 for gifts over $15K to an individual.  If you are married, you can give up to $30K without having to file Form 709.  I would think that the IRS can give you that information. Lifetime gift tax exemption for 2021 is $11.7 for individual and $23.4 for married couple.

[xmasbaby0]

You do not actually pay a gift tax if you gave someone $15K.   You do not pay until or unless you reach the lifetime exclusion amount.   But if you give someone a gift of $15K you are supposed to put it on a gift form so the IRS can start keeping a record in case you ever reach the limit.

Money that you receive as a gift is not taxable income to you, and you do not need to report it on your income tax return.  Money that you gave as a gift to someone else is not deductible for your taxes.

Turbo Tax does not support the gift tax form 709, but here is a link:

https://www.irs.gov/pub/irs-pdf/f709.pdf

https://turbotax.intuit.com/tax-tips/estates/the-gift-tax-made-simple/L5tGWVC8N

https://www.forbes.com/sites/ashleaebeling/2017/10/19/irs-announces-2018-estate-and-gift-tax-limits-...

[pelliott]

If I give my daughter *80,000 as a gift, does that come off of my reportable income?

[xmasbaby0]

@pelliott You will not be entering a gift to your daughter on your income tax return, so no, it is not your "reportable" income.   If you exceed the yearly limit for a gift to an individual, you will need to file a Form 709 gift tax form, which is a separate form that is not included with your income tax return.  

This appeared directly above your own post---but in case you did not read:

GIFTS

Money that you receive as a gift is not taxable income to you, and you do not need to report it on your income tax return.  Money that you gave as a gift to someone else is not deductible for your taxes.

Turbo Tax does not support the gift tax form 709, but here is a link:

https://www.irs.gov/pub/irs-pdf/f709.pdf

https://turbotax.intuit.com/tax-tips/estates/the-gift-tax-made-simple/L5tGWVC8N

[DoninGA]

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@pelliott wrote:

If I give my daughter *80,000 as a gift, does that come off of my reportable income?

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No.  Gifts given are not reported on a tax return.  If the gift given in 2022 is more than$16,000 you are required to report the gift to the IRS on a Form 709.  The Form is filed separately from your federal tax return and is mailed to the IRS.   If the total of all gifts ever given is less than $12 million then you will not have any taxes owed on the gift given.

TurboTax does not support Form 709.

Go to this IRS website for Form 709 (2021) - https://www.irs.gov/pub/irs-pdf/i709.pdf

[pelliott]

My brother and I sold my late father's house and the net proceeds were $286,000 that we are splitting equally at $143,000. If I give all of my portion except $18,000, will I have to pay state of NC state taxes on the entire $143 or the $18

[Critter-3]

You had a taxable sale that must be reported.  What you do with the proceeds is immaterial for income tax purposes.   Now if you give any one person more than $16K in a single tax year then you must file a form 709 to report the gift.  These are totally separate items.