Wednesday, March 15, 2023

How Gift Taxes Work

estate planning attorney Ann Arbor

The annual gift tax exclusion is $17,000 in 2023. This means annually you can give $17,000 to as many individuals as you like without filing a gift tax return. But if you give anyone more than $17,000 per year, you'll need to report the excess on a gift tax return. It's unlikely that you'll have to pay any tax because the gifts are only taxed when they cumulatively reach the $13 million exemption. 

For example, If you give your child $2 million in 2023, you’ll have to report a taxable gift of $2 million. If you die before 2026, your estate tax exemption will be $11 million ($13 million exemption - $2 million gift) instead of $13 million. 

Learn more about what will happen when the gift and estate tax exemption gets cut in half here.


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If you’re interested in learning more about estate planning, please contact an estate planning attorney in Ann Arbor at 734-665-4441.

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