Gavin Howe
In the United States, you can give your brother-in-law a gift of up to $15,000 per year without having to file a gift tax return. If you want to give a larger gift, you will need to file a gift tax return and the amount over $15,000 will be deducted from your lifetime gift tax exclusion, which is currently over $11 million per person. If you want to avoid the hassle of filing gift tax forms, you could give your brother-in-law smaller gifts over the course of a few years, up to the annual exclusion amount. There are some exceptions to the annual exclusion limit, such as gifts for tuition or medical expenses, which can be paid directly to the institution without incurring a tax penalty.
| Characteristics | Values |
|---|---|
| Can brother-in-law give a gift? | Yes, but there may be tax implications. |
| Gift tax exclusion | $15,000 per year |
| Gift tax exclusion for spouses | $28,000 |
| Lifetime gift tax exclusion | $11 million |
| Gift tax return form | IRS form 709 |
| Gift ideas | Decanter-and-glasses set, AirPods, jacket, watch, bathrobe |
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Gift tax return
In the United States, there is no federal inheritance tax, but there is a federal gift tax. This federal gift tax is applied to individuals giving anything of value to another person. The annual gift tax exclusion amount is $15,000 in 2021, $16,000 in 2022, and $17,000 in 2023. This means that in 2021, you could give $15,000 to one person, another $15,000 to someone else, and so on, without having to file a gift tax return. The annual exclusion amount is per recipient, not the sum total of all your gifts. For example, in 2025, you could give $19,000 to your cousin, another $19,000 to a friend, and so on, without needing to file a gift tax return. If you give over the annual exclusion amount in cash or assets (e.g. stocks, land, a new car) to any one person during the tax year, you will need to file a gift tax return, Form 709, in addition to your federal tax return the following year. For instance, if you gift $40,000 to your brother, this would be over the $15,000 limit in 2021 by $25,000. So, you would need to file a gift tax return and claim the additional $25,000 as a gift.
The gift tax return is only used by those who have given over the annual exclusion amount. For example, in 2022, if an individual gifted anything over $16,000 to a single recipient, they must fill out a gift tax return form. In 2023, the threshold increases to $17,000. Some gifts are exempt from this rule, including gifts given to pay tuition and medical bills. Gifts to your spouse are also exempt and are eligible for the marital deduction. Gifts to a political organization for its use and qualifying charities are deductible from the value of the gift(s) made.
The federal government allows married couples who file together to double their gift tax through a process called gift splitting. For instance, a couple filing a gift tax return in 2022 could gift $32,000 before the giver needed to pay taxes on the amount (this increases to $34,000 in 2023). To take advantage of gift splitting, both spouses must agree to the gift and specify the situation when filing their taxes.
In addition to the annual gift tax exclusion, there is also a lifetime gift tax exclusion. Any amount you give over the annual limit is subtracted from your larger lifetime limit. Once you've gifted over your lifetime amount, you may begin to owe taxes. The gift tax return that you need to file if you exceed the annual limit simply keeps track of that lifetime exclusion. So, if you don't gift anything during your life, then you have your whole lifetime exclusion to use against your estate when you die. The lifetime exclusion amount is $11 million per person in 2021, $12.06 million in 2022, and $12.92 million in 2023.
If you are unsure whether the gift tax applies to your situation, refer to Publication 559, Survivors, Executors, and Administrators. It is also acceptable to send a written request to the IRS to secure a gift tax transcript if you do not have a record of which tax year(s) a gift tax return was filed.
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Lifetime exclusion
In the United States, gifts are generally considered taxable. However, there are several exceptions to this rule. For instance, gifts that are not more than the annual exclusion for the calendar year are not considered taxable gifts. In 2024, the annual exclusion amount was $15,000, and in 2025, it increased to $18,000. If you are married, you and your spouse could each give away this amount without needing to file a gift tax return for that year. Additionally, gifts between spouses are unlimited and do not usually trigger a gift tax return.
Now, let's discuss the concept of "lifetime exclusion" in the context of gift tax. The lifetime exclusion, also known as the lifetime gift tax exclusion or lifetime exemption, refers to the total amount of money that an individual can give away during their lifetime and after death without incurring gift tax. In other words, it is the cumulative value of gifts that can be given by a person over their lifetime before gift tax becomes payable. The lifetime exclusion amount is separate from and in addition to the annual exclusion.
For 2025, the lifetime exclusion amount is $13.99 million. This means that an individual can give away up to this amount during their lifetime and upon their death without paying gift tax. It is important to note that any amount given above the annual exclusion in a particular year is subtracted from the lifetime exclusion bucket. For example, if you gave your brother $50,000 in 2024, you exceeded the annual exclusion by $32,000 ($50,000 - $18,000). This excess amount of $32,000 would then be deducted from your lifetime exclusion.
The lifetime exclusion amount has changed over the years. In 2024, it was $13.61 million, and before that, in 2023, it was $12.92 million. It is worth noting that the lifetime exclusion amount is scheduled to be reduced to pre-2018 levels after 2025, which could result in a significant decrease in the exclusion amount.
Understanding the lifetime exclusion is essential for effective estate planning and gift-giving strategies. By staying informed about the annual and lifetime exclusion amounts and consulting with tax professionals, individuals can navigate the gift-giving landscape in a tax-efficient manner.
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Tax exemption
In the United States, the gift tax is a federal tax on the transfer of money or property to another person. The general rule is that any gift is a taxable gift. However, there are several exemptions to this rule.
Firstly, gifts to your spouse are eligible for the marital deduction. Secondly, tuition or medical expenses paid for someone are exempt from gift tax. Gifts to a political organization for its use and gifts to qualifying charities are also deductible from the value of the gift(s) made.
The IRS allows individuals to give away a specific amount of assets or property each year tax-free. For 2025, the annual gift tax exclusion is $19,000, up from $18,000 in 2024. This means a person can give up to $19,000 to as many people as they want without having to pay any taxes on the gifts. If a gift exceeds the annual exclusion limit, the difference is simply subtracted from the person's lifetime exemption limit, and no taxes are owed. For 2025, the lifetime gift tax exemption is $13.99 million, up from $13.61 million in 2024. The limit for married couples filing jointly is $27.98 million for 2025. However, in 2026, the exclusion amount will revert to its pre-2018 level of about $5 million (as adjusted for inflation) per individual.
If a gift exceeds the annual limit, the donor must file a gift tax return and claim the additional amount as a gift. This will reduce the amount they can leave tax-free to heirs at death and during their lifetime. The donor is generally responsible for paying the gift tax. However, under special arrangements, the recipient may agree to pay the tax instead.
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Tax liability
In the United States, gifts between family members are generally not taxed, including gifts from a brother-in-law. However, there are some considerations and exceptions to keep in mind regarding gift tax liability.
Firstly, it's important to understand the concept of the annual exclusion amount. For 2025, this amount is $19,000 per person, meaning you can gift up to $19,000 to someone without having to report it to the IRS. If you are married, this limit doubles to $38,000. This exclusion applies per recipient, so you could give $19,000 to multiple people without triggering a gift tax return. However, if you exceed this annual limit for a particular individual, you will need to file a gift tax return, even though you may not necessarily owe taxes. The amount exceeding the annual exclusion will be subtracted from your lifetime gift tax exclusion.
For example, if you receive a gift of $40,000 from your brother-in-law, it surpasses the annual exclusion amount by $25,000. In this case, your brother-in-law would need to file a gift tax return and report this additional amount as a gift during his lifetime. Consequently, he would have to deduct the $25,000 from his lifetime gift tax exclusion, which was over $11 million per person in 2025. It's worth noting that this lifetime exclusion amount is subject to change; it is expected to decrease to around $3.5 million in the future.
Additionally, certain types of gifts are generally not considered taxable. These include gifts to your spouse, tuition or medical expenses paid on someone's behalf, gifts to a political organization, and gifts to qualifying charities. Gifts made as part of an overall estate and financial plan may involve attorneys and CPAs who can advise on the tax implications and handle the necessary documentation.
While the donor is typically responsible for paying any gift tax, special arrangements can be made for the recipient to pay the tax instead. It is recommended to consult a tax professional for specific guidance on gift tax liability and compliance with IRS regulations.
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Gift tax transcript
In the United States, the gift tax applies to the transfer of property, including money, without expecting something of equal value in return. The donor (person making the gift) is generally responsible for paying the gift tax. However, under special arrangements, the donee (person receiving the gift) may agree to pay the tax instead.
The gift tax applies to all transfers by gift of property, wherever situated, by a citizen or resident of the United States, to the extent that the value of the transfers exceeds the amount of the exclusions and deductions authorized by the Internal Revenue Code. For example, gifts to your spouse, to a political organization, or to qualifying charities are deductible from the value of the gift(s) made. The annual exclusion amount for 2024 is $18,000, which means that you can give up to $18,000 to each of your children without incurring gift tax. This amount is subject to change each year.
If the gift amount exceeds the annual exclusion, the donor must file a gift tax return and claim the additional amount as a gift. This amount will be deducted from the donor's lifetime gift tax exclusion, which is $11 million per person as of 2025. It is important to note that this limit will decrease to around $3.5 million after 2025.
To obtain a gift tax transcript, individuals can submit Form 4506 or Form 4506-T to the IRS. These forms are available on IRS.gov and must be properly completed and submitted with substantiation and payment. There is a fee of $50 per tax return requested, but no fee for transcript requests. Alternatively, a written request can be sent to the IRS, specifically asking for a determination of "All Gift Tax Returns Filed" for the taxpayer.
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Frequently asked questions
Yes, your brother-in-law can give you a gift of $40,000, but he must file a gift tax return to deduct the amount from his lifetime exclusion.
Yes, the annual exclusion amount is $15,000. So, if your brother-in-law gifts you $40,000, it is $25,000 over the limit.
No, your brother-in-law does not have to pay taxes on the gift unless he has already gifted over $11 million in his lifetime.
No, receivers of gifts do not pay taxes on them.
Yes, he will need to file a gift tax return (IRS Form 709) to deduct the amount from his lifetime exclusion.
