The 2023 annual exclusion is $17,000 per person per recipient

In 2023, you can give up to $17,000 to as many people as you want without filing a federal gift tax return with the IRS. This amount is called the annual exclusion. If you give more than $17,000 to one person in a single year, you must file Form 709 (United States Gift Tax Return) with the IRS, even if you owe no tax.

The $17,000 limit applies to each recipient separately. You could give $17,000 to your child, $17,000 to your grandchild, and $17,000 to a friend in the same year without triggering a return requirement. The limit resets on January 1 each year.

If you are married and file jointly, your spouse has a separate $17,000 annual exclusion. Together, you and your spouse can give $34,000 to one person without filing. This is called gift splitting, and both spouses must agree to it on the tax return.

Key Takeaways

  • You can give $17,000 per person per year in 2023 without filing a gift tax return with the IRS.
  • If you give more than $17,000 to one person in a calendar year, you must file Form 709 even if no tax is owed.
  • Married couples can combine their exclusions to give $34,000 per recipient if both spouses consent to gift splitting.
  • The annual exclusion amount changes most years based on inflation and is rounded to the nearest $1,000.

What counts as a gift under the $17,000 limit

A gift is any transfer of money or property where you receive nothing of equal value in return. Cash, stocks, real estate, vehicles, and jewelry all count. Forgiving a loan also counts as a gift of the amount forgiven.

Gifts to your spouse who is a U.S. citizen are not subject to the annual exclusion at all — you can give your spouse any amount without filing. Gifts to a spouse who is not a U.S. citizen have a higher annual exclusion of $175,000 in 2023.

Payments made directly to a school or medical provider for someone else's tuition or medical bills do not count as gifts, even if you pay more than $17,000. The payment must go straight to the provider, not to the person receiving the education or care. This is called the direct payment exclusion.

What happens if you give more than $17,000 in one year

If you give more than $17,000 to one person in 2023, you file Form 709 with the IRS. Filing the form does not mean you owe gift tax. Instead, the excess amount is subtracted from your lifetime exemption, which is $12.92 million in 2023. Most people never owe gift tax because their lifetime gifts stay below this exemption.

You must file Form 709 by April 15 of the following year (or by your tax return important date if you file an extension). If you do not file when required, the IRS may assess penalties and interest.

Filing Form 709 does not trigger an audit. It is a routine form that documents large gifts. However, if you file multiple forms over time showing gifts that approach your lifetime exemption, the IRS may review your estate plan when you pass away.

How the annual exclusion changes each year

The IRS adjusts the annual exclusion amount for inflation every year. In 2022, the limit was $16,000. In 2023, it rose to $17,000. In 2024, it is $18,000. The amount is always rounded to the nearest $1,000.

You do not need to track the exclusion yourself — the IRS announces the new amount in late October or early November each year. If you plan to give large gifts, check the current year's exclusion before you transfer money.

Gifts to minors and the $17,000 limit

Gifts to your children, grandchildren, or other minors follow the same $17,000 annual exclusion as gifts to adults. You can give $17,000 to each child without filing a return.

If you want to give money to a minor but do not want them to control it when ready, you can place the gift in a custodial account or a trust. These structures do not change the gift tax rules — the $17,000 limit still applies. However, they do affect how and when the minor can access the money.

Frequently Asked Questions

Do I owe gift tax if I give $20,000 to my child in 2023?

You do not owe gift tax, but you must file Form 709 because you gave $3,000 more than the $17,000 annual exclusion. The $3,000 excess is subtracted from your $12.92 million lifetime exemption. Most people never owe tax because their lifetime gifts remain well below this threshold.

Can I split a gift with my spouse if we are not married?

No. Gift splitting is only available to married couples who file jointly. If you are unmarried, each person has their own $17,000 annual exclusion. Your partner cannot use your exclusion or combine it with theirs.

What if I give someone $10,000 in January and $8,000 in December of the same year?

The two gifts add up to $18,000 in the same calendar year, so you must file Form 709 because you exceeded the $17,000 limit. The $1,000 excess counts against your lifetime exemption. The IRS counts all gifts to the same person in the same calendar year together.

Does paying my child's college tuition count toward the $17,000 limit?

No, if you pay the tuition directly to the school. Direct payments for education or medical care are not subject to the annual exclusion, so you can pay any amount without filing. The payment must go to the educational institution or medical provider, not to your child.

If my spouse and I give $34,000 to our daughter using gift splitting, do we both have to file Form 709?

Yes. Both spouses must file Form 709 to report the gift split, even though no tax is owed. The form documents that you both agreed to split the gift and that each spouse used $17,000 of their annual exclusion.