How much can I gift each year? by Jesica L. Thorson

With Christmas and the end of the year approaching, I am often asked how much gifting can or should I do. The IRS has set an annual gift tax exclusion amount of $18,000.00 per person for the 2024 tax years. It is estimated to be $19,000 in 2025. These gifts do not count against your $13.61 million lifetime exemption (for 2024) and do not need to be reported to the IRS. You are only required to report gifts that are larger than the $18,000.00. However, for those individuals that are receiving Medicaid benefits, or may need Medicaid benefits in the near future, the maximum amount of allowed gifting is $1,200.00 per year not per person. Individuals are required to report any gifting that has been done 5 years prior to making a Medicaid application. In other words, if you apply for Medicaid benefits on January 1, 2025, you will have to report all gifts that have been made since January 1, 2020. This would include the annual gift tax exclusion amount even though you did not have to report the gift to the IRS. Determining how much to gift will depend on an individual’s goals and health needs. It is important to discuss your gifting strategies with your financial advisor as well as legal counsel to ensure that you are meeting your goals while protecting yourself.