Just to get a ahead of the inevitable: - “Who’s going to know? Who’s checking what I gift people?” I mean, the IRS if they so chose to audit you, I guess. Understand, I’m just letting you know the rules because people ask about this all the time, I don’t care what you do (unless you’re my client) - “If the TCJA sunsets it’s going to drop back down to $6mil or so for the exemption.” Ok. Yes, things in a different year may be different than 2024. - “That’s crazy that they’d tax money that’s already been taxed!” Don’t disagree, but again, just informing you of the rules, not creating them. Take it up with congress, not me. - “Rich people something something blah blah” I get it: “rich people bad”, “nepotism no good”, “first world problems”. Let it go, we’re just discussing the mechanics of a transaction and how it exists in the world of taxes. I hope that hits them all, but I’m sure it won’t.

I can pay my kid $18,000 a year. They're not gonna pay any taxes on that, right? You're talking about gifting your kid's money, right? Like the gift tax exclusion? Yeah, that thing. Well, you can actually gift your kids however much money you want. It could be well over $18,000 and they will not pay any taxes on it. Oh, well, then what's this $18,000 gift tax exclusion thing then? The gift tax exclusion, as its name implies, is an exclusion on gift tax, not an exclusion on income tax. Okay, right, but wouldn't my kids be paying gift tax on the money that I gift them? No, the recipient of a gift does not pay any taxes on the gift they receive. The giver of the gift, the gifter, is the one who might potentially pay taxes on the gift they give to another individual. Wait, so I might pay taxes if I gift my kids money? Correct, if you give over $18,000 to another individual in the year, whether you're related to them or not, just any individual in the year, you would need to file a gift tax return and might potentially pay taxes on that. Dude, that's crazy. It is until you realize, even if you go over the $18,000 exclusion, you'll then just dip into your estate tax exemption of about $13 million for 2024 and most people aren't ever really gonna pay any gift tax. It's just they're gonna have to file the gift tax return to use up some of that exemption. Oh, well, that still sounds like a pain in the butt to have to file something if I just pay someone a little over $18,000. That is true, but there are ways to plan around this such as doubling things up. If you're married, then you and your spouse can both give $18,000 individually to another individual. Okay, so me and my wife could both give up to $18,000 to our son not to worry about a gift tax return so we could give him $36,000 and not have to worry about anything? Exactly, and let's say your son was also married. That means that you could give $36,000 to him and $36,000 to his spouse, and there you go, that's $72,000 that you gifted to him fully in the exclusion. Oh, yeah, that makes sense, that's good to know. I mean, hey, if you're wanting to really, really give your kids a bunch of money and for some reason it's burning a hole in your pocket, if you're giving them a gift at Christmas of that $72,000, you could then wait till January 1 and give them another $72,000 for the next year. Just by timing it around years, you can give a lot in a short period of time utilizing your exclusions. Good to know, probably not gonna do that because I don't wanna give my kids that much money, but that is good to know.