Understanding the 2024 Annual Gift Tax Exclusion and Gift Splitting

Use this simple checklist to see if your gift fits the annual exclusion for the United States 🇺🇸 in 2024:

• Is the gift a present interest (the recipient can use it right away)?
• Is the total you give to that person in 2024 $18,000 or less?
• If you’re married, are you and your spouse together giving $36,000 or less to that person, or electing gift splitting properly?
• If you’re giving more than the limit, are you ready to file Form 709 to report it and apply your lifetime exemption?

If you answered “yes” to the first two questions, your gift is generally within the annual exclusion and no gift tax is due for that gift. If you’re married and using gift splitting, you must meet the filing rules even if no tax is due.

Core rules you must meet

• Annual exclusion amount (2024): $18,000 per recipient. You can give up to $18,000 to each person in 2024 without gift tax, as long as it’s a present interest. You can do this for any number of people.
• Present vs. future interests: The exclusion applies only to gifts the recipient can use now. Gifts of future interests don’t qualify for the annual exclusion.
• Married couples: Each spouse can separately give $18,000 to the same person in 2024. That means a couple can give up to $36,000 to one person without a taxable gift.
• Gift splitting: If one spouse gives more than $18,000 to a person, both spouses can consent to treat the gift as made half by each spouse. This is called gift splitting. To split gifts, both spouses must:
  1. Consent to split that gift and all other gifts for the year
  2. File a separate Form 709 (there’s no joint return)
  3. Complete the gift‑splitting section and have the consenting spouse sign the Consent of Spouse line
• Filing requirement: You must file a gift tax return (Form 709) for any reportable gift over the annual exclusion, even if no tax is due because you’re using your lifetime exemption.

When filing is required and when tax is due

• When tax is due: Gift tax is due for the period in which a gift is completed.
• Joint bank account exception: If you place money into a joint bank account with the recipient, the gift is treated as made when the recipient withdraws funds.
• Form 709 filing triggers:
  • You gave more than $18,000 in 2024 to a person (unless properly split and reported)
  • You elected gift splitting (both spouses must file separate returns)
  • You gave a gift of a future interest

Link to form and instructions:
– IRS Form 709 (United States Gift and Generation‑Skipping Transfer Tax Return): About Form 709

General IRS guidance on gift tax rules:
– IRS Gift Tax page: Gift Tax

Lifetime exemption interaction

If you give more than the annual exclusion, the excess reduces your lifetime gift and estate tax exemption. For 2024, the lifetime exemption is $13.61 million per individual. You owe gift tax only after you’ve used up your lifetime exemption.

According to analysis by VisaVerge.com, this structure lets many families make large gifts during life without paying gift tax now, as long as they report correctly and track their remaining exemption.

Looking ahead, in 2025:
– The annual exclusion rises to $19,000 per recipient.
– The lifetime exemption rises to $13.99 million per individual.

Detailed eligibility rules with examples

1) Annual exclusion gifts you can make in 2024
– You give your niece $18,000 in June 2024. This is a present interest and within the annual exclusion. No Form 709 needed, and no gift tax due for that gift.
– You give ten friends $5,000 each in 2024. All are present‑interest gifts. Because each gift is under $18,000, none is taxable, and no return is needed for those gifts.

2) Gifts over the exclusion
– You give your son $30,000 in 2024. The first $18,000 is covered by the annual exclusion. The remaining $12,000 is reported on Form 709 and reduces your lifetime exemption. You likely owe no gift tax now unless you’ve already used your lifetime exemption.
– You deposit $25,000 into a joint bank account with your daughter in 2024. She withdraws $10,000 in December 2024 and $15,000 in 2025. For gift tax purposes, the 2024 gift is $10,000 (no filing needed). The 2025 withdrawal counts for 2025 rules.

3) Married couples and gift splitting
– You and your spouse want to give your nephew $36,000 in 2024. You can each give $18,000, and no filing is required.
– One spouse gives $36,000 to a friend in 2024. If you elect gift splitting, it’s treated as $18,000 from each spouse. Both spouses must file separate Form 709 returns to report the split. No gift tax is due because each half fits within the annual exclusion.
– One spouse gives $50,000 to a sibling in 2024, and you elect gift splitting. Each spouse is treated as giving $25,000. For each spouse, $18,000 is excluded and $7,000 is reportable on Form 709 against the lifetime exemption.

4) Future interests (not eligible for the exclusion)
– You promise a gift the recipient can only use in 2030. That’s a future interest. The annual exclusion doesn’t apply, so you must file Form 709, and the amount reduces your lifetime exemption.

Disqualifying factors that remove you from the exclusion

• The gift is a future interest (no immediate use by the recipient)
• You exceed $18,000 per person in 2024 and don’t elect or properly report gift splitting
• You fail to file Form 709 when required
• You mis‑time gifts in joint accounts; the gift counts when the recipient withdraws, not when you deposit
• You try to file a joint Form 709 (it doesn’t exist) instead of separate returns for each spouse

TIP: If the donor doesn’t pay any gift tax due, the IRS may ask the recipient to pay the tax. File and pay on time to avoid that outcome.

Not eligible for the exclusion? Your alternatives

• Use your lifetime exemption. Gifts above $18,000 in 2024 reduce your $13.61 million lifetime limit. You likely owe no tax now unless you’ve already used that full amount.
• Elect gift splitting if you’re married. This can double the amount you can give tax‑free to a person in 2024 and may cut down the reportable excess.
• Wait until 2025 if timing allows. The annual exclusion increases to $19,000 per recipient.

How to improve your chances of staying within the rules

• Track gifts per recipient carefully. Keep a simple log with dates and amounts per person.
• Spread gifts among multiple people when your goal is to support a group, not just one person.
• If married, plan together. Decide early whether you’ll use gift splitting, and remember both spouses must file separate Form 709 when splitting.
• Avoid future‑interest structures unless you’re ready to file and use lifetime exemption.
• Be careful with joint bank accounts. If you need the gift to count in 2024, make sure the recipient withdraws the funds in 2024.
• File on time and keep copies. Use the official IRS pages for form access and directions:
  • Form access and details: About Form 709
  • Gift tax overview and FAQs: Gift Tax

Common scenarios answered

• Do I need to file if I give exactly $18,000 to one person in 2024?
  No filing needed for that gift if it’s a present interest and you’re not splitting.

• Do I need to file if I give $25,000 to one person?
  Yes, file Form 709 for the $7,000 above the exclusion. It reduces your lifetime exemption.

• Do both spouses file when splitting?
  Yes. Each spouse files a separate Form 709, completes the gift‑splitting section, and the consenting spouse signs the Consent of Spouse line.

• Can I give $18,000 to as many people as I want?
  Yes. The annual exclusion is per recipient, per year.

• When is a gift to a joint bank account complete?
  When the recipient withdraws the money.

2025 planning notes

If you’re close to the limit this year, consider timing:

• The annual exclusion rises to $19,000 in 2025.
• The lifetime exemption rises to $13.99 million in 2025.
• Gifts count in the year they are completed; for joint accounts, that’s when funds are withdrawn by the recipient.

Practical filing steps

1. Gather totals given to each person in 2024.
2. Decide if you and your spouse will use gift splitting.
3. If required, file a separate Form 709 for each spouse. Be sure to:
   • Complete the gift‑splitting section
   • Have the consenting spouse sign the Consent of Spouse line
   • Keep copies for your records

Following these rules will help you make tax‑efficient gifts, avoid penalties, and keep your long‑term estate plan on track.