How Much Money Can You Give Your Child Without Paying Taxes in the U.S.?

How Much Money Can You Give Your Child Without Paying Taxes in the U.S.?

If you’re planning to give your child a large sum of money — for college, a house, or just a head start in life — you might be wondering: Will the IRS tax it?

Let’s break down how gift taxes work in the U.S. and what you need to know to give wisely.

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🎁 What Is the Gift Tax?

The gift tax is a federal tax applied when one person gives money or property to another without receiving anything in return.

But don’t panic — there are generous exemptions, and most people never end up paying this tax.

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✅ Annual Gift Tax Exclusion (2024)

You can give up to $18,000 per year per person without any tax or reporting.

• Married couples can combine their exclusions → $36,000 per child per year

• Applies to cash, checks, stocks, property, or other assets

📝 No IRS Form 709 required if you're under the limit.

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💼 What If You Exceed the Limit?

You don’t pay tax right away. Instead:

• You file IRS Form 709

• The extra amount counts toward your lifetime exemption

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💰 Lifetime Gift & Estate Tax Exemption (2024)

As of 2024, the exemption is $13.61 million per person
→ That’s over $27 million for married couples

So unless you’re extremely wealthy, you’re unlikely to ever pay federal gift tax.

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🧒 Common Ways Parents Gift Money to Children

• Direct cash transfer

• 529 College Savings Plans

• UTMA/UGMA custodial accounts

• Trust funds (for large gifts)

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⚠️ State-Level Gift Taxes?

Most U.S. states do not impose gift taxes, but some may impact estate planning.
→ Always check your state’s estate tax rules.

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📝 Conclusion

You can give your child up to $18,000 annually (or $36,000 as a couple) tax-free — and even more if you're using your lifetime exemption.

To avoid surprises, always keep records, file Form 709 when needed, and consider consulting a tax or estate planning expert if large gifts are involved.

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