Question

Lance has two adult children from a previous marriage. He has gifted them money for the past three years from his separate bank account and his wife has consented to split the gifts each year. Lance made gifts to his children as follows: 2016: Gifts of $60,000 to each child 2017: Gifts of $40,000 to each child 2018: Gifts of $50,000 to each child

Explain the gift tax filing requirements. Will Lance have to file a gift tax return? What about his wife?

Answer 1

Sol: Gift tax exclusion limit = $15,000 for each person

2016: ($60,000 × 3) + ($15,000 × 3) = $135,000 goes to lifetime exclusion

2017: ($40,000 × 3) + ($15,000 × 3) = $75,000 goes to lifetime exclusion

2018: ($50,000 × 3) + ($15,000 × 3) = $105,000 goes to lifetime exclusion

Lance have to file gift tax return because his gifts are exceeding the basic exclusion limit but he does not have to pay any tax on these gifts given to his children as the gifts didn't exceed the lifetime gift exclusion limit i.e $11.58 million.

Lance's wife does not have to file gift tax return.