Gift Tax

A frequent question that The Calculated CPA receives is do I owe taxes if I receive a gift?

The answer to that is that gifts are almost always tax-free for the person receiving the gift. It has to be a true gift - it cannot be in return for services or a trade/sale of assets.

What about for the person making the gift?

Then it depends on the amount being given. Each year there is an annual exclusion for gift giving and in 2026 that amount is $19,000. If you gift someone more than $19,000 (combined throughout the year) then you have an obligation to file a gift tax return as that is considered a “taxable gift”. That doesn’t mean that there will be tax due. Also, there is an exclusion for gifts given to charitable organizations and spouses.

Taxable gifts reduce the gift-giver’s lifetime exclusion amount - this is currently 15 million dollars. If you give taxable gifts in excess of the lifetime exclusion amount, which is subject to change, in your lifetime, then that is when gifts become taxable. It is also important to note that taxable gifts are added to the donor’s taxable estate at death. So if you are a taxpayer with a large estate, it is important to take note of the lifetime exclusion and to work with your estate attorney and a CPA so that you and/or your heirs are prepared for the estate tax liability.

For taxpayers who have small estates (the average American), a gift tax return is an additional filing requirement, but is unlikely to result in any tax due.

The gift tax return due date is usually April 15 and can be completed with your individual income tax return.

What counts as a gift?

Checks, cash, forgiven loans (by a family member or friend), below-market sale (Mom sells the family home to her child for $150,000, but the home is worth $400,000), bonds, stocks, CDs, trusts, and digital assets are some examples of gifts. This is not an exhaustive list.

Payment of tuition or medical services is not considered a gift as long as it is paid directly to the school/provider.

It is always a good idea to consult with your CPA before making or receiving a large gift to ensure you are aware of the tax implications.

All information contains general information for taxpayers and should not be relied upon as advice. Taxpayers should seek professional tax advice for information about your specific situation.