Hello, my name is Dalton Kidd. I am an attorney here in Emmetsburg. While I have a general practice, we do focus on estate planning, real estate, business, and related civil litigation. Twice a month (hopefully!) I plan on providing a quick overview of legal issues in a blog-style format that I see in my practice, in the news, and/or are timely. As most attorneys will tell you, when we get asked general questions, our answer is usually “it depends”; thus, (**disclaimer**) you should always seek legal advice for your specific situation.
With the holiday season in full swing, let’s talk about something we all like to receive this time of year: PRESENTS! Another name for presents is gifts. So what is a legal gift? Essentially it is transferring an asset for no consideration and no strings attached (this can be complicated).
A question that comes up often is “do I have to pay taxes on any gifts I give to friends and family?” Well, it depends! (see above). The good news is for most gifts, the answer is no! However, again, there is more to the story. First, there is a legal term called the Annual Gift Tax Exclusion. Under current law for 2025, an individual can give up to $19,000.00 each to as many different people each year. Most gifts fall under this. If such gift qualifies, there is no gift tax, income tax, or estate tax; and you do not need to even file a gift tax return. If you are married you can double that amount! Also, the recipient doesn’t have to pay taxes on the gift either!!
What if you want to give over that amount? You can, but you use up some of your lifetime exclusion amount. This amount changes each year (adjusted for inflation). Think of it as we are all given a certain amount of value we can give away tax free throughout our lifetime and at death. If you use some of this exclusion up, you are required to file a tax return, but no tax will be due unless you use up over your exclusion amount. As with most laws, there are complicated nuances and consequences for the giver and recipient. You should seek legal counsel before making substantial gifts.
