Q: I read your answer on your blog regarding the question “What happens if I make a $100,000 gift to my child one year?”. The answer said that “under current law, you can make $11.58 million dollars’ worth of gifts in your lifetime without incurring any gift tax liability”. If so, why do lots of online sites say that we can give up to $15,000, which is the max amount for tax free monetary gift?

by | Mar 16, 2022 | Annual and Lifetime Gift Tax Exclusions, Estate Planning, Q&A |

A: There are two different exclusions that allow you to avoid gift tax: the annual gift tax exclusion ($15,000 per year in 2021 and $16,000 per year in 2022) and the lifetime gift tax exclusion amount ($11.7 million in 2021 and $12.06 million in 2022). When you gift more than those amounts, you’ll have to file a gift tax return: however, that doesn’t mean you have to pay a gift tax; rather, the IRS will keep track of the amount of lifetime exemption you are using. If you don’t gift anything that will require you to file the gift tax return, then your estate will have your whole lifetime exemption to use upon your passing.