how the gift tax return works
individuals who give a gift that exceeds the annual or lifetime exempt gift limit established by the internal revenue service irs must fill out the form when filing their taxes the annual exemption limit is 16 000 per gift for 2022 17 000 for 2023 and the lifetime exemption in 2022 is 12 06 million 12 92 million for 2023 the lifetime exemption is inflation indexed so it will rise year over year 123for 2022 if an individual gifts anything over the limit even 16 001 to a single recipient that individual must fill out a gift tax return form the return must be filled out because gifts above the exempt amount are subject to a gift tax 2the gift tax return is only used by those who have given over 16 000 in 2022 17 000 in 2023 12 as the regulations applied to gift taxes are very complicated it is best to consult a professional as well as your local tax law in order to avoid the gift tax many people use estate planning working with a financial planner tax professional or attorney to strategically choose when how and who gets the estate owner s money who files the gift tax return and who pays the gift tax a gift tax is a federal tax applied to an individual giving anything of value to another person for something to be considered a gift the receiving party cannot pay the giver full value for the gift but may pay an amount less than its full value 2a gift tax return is a form that must be filed by a gift giver if they give any amount over the gift tax exemption unless special arrangements have been made it is always the gift giver not the recipient who is responsible for paying the gift tax and for filing the gift tax return 2the gift tax return is irs form 709 the receiver of the gift may pay the gift tax or a percentage of it on the giver s behalf in the event that the giver has exceeded their lifetime gift exclusion limit 2the federal government allows married couples who file together to double the amount of their gift tax through a process called gift splitting married couples combine their individual allowances as if each contributed half of the amount 2for gift splitting to be official both spouses must agree to the gift and specify the situation in which the gift was given when filing their taxes a couple filing a gift tax return in 2022 could gift 32 000 before the giver needed to pay taxes on the amount that amount increases to 34 000 in 2023 12