Quote:
Originally Posted by retiredguy123
Note that the annual exclusion only reduces your lifetime estate exclusion from the $13.61 million lifetime limit, and requires you to file a gift tax return with the IRS. It does not trigger any estate tax for you or the recipient until your gifting exceeds the lifetime limit. For example, if you give $100,000 to an individual this year, your lifetime estate limit of $13.61 million will be reduced by $82,000 ($100,000 minus $18,000), but you would owe no estate tax. The only reason to file the gift tax return is to document that the lifetime exclusion has been reduced.
Note that, even if you have a billion dollars, you can give it all away while you are still alive as long as you give no more than $18,000 per year per recipient, and pay no estate tax. And, when you die, you will still have an estate tax exclusion of $13.61 million.
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I don't think a person could live long enough or have enough children to give away $1B in chunks of $18,000/child/year. But yes, I understand the point.
The basic exclusion calculation was hard to find. The IRS says gift tax yes, unless no, but maybe yes, except for basic exclusion, which was increased in 2018, but significantly decreases in 2026, and then is only explained on the form but is explained in IRS-speak which is barely intelligible. Ultimately, it looks like you are correct but it sure isn't easy to figure out.