How much can you gift someone without gift taxes being due?

Attorney Tom Olsen: Chrissy, we have a text up there. Why don’t you read the text to our listeners?

Attorney Chris Merrill: Hello, my mom is 78 years old and recently sold her home. If she wants to gift money to my brother and I, what is the best way for her to avoid taxes?

Attorney Tom Olsen: Well, the present state of the internal revenue service code is that you can give up to $15,000 per person per calendar year without any gift or estate tax consequences. When I say per person, it's not limited to family members, it could be anybody, a friend, it could be a stranger. When we talk about per calendar year, I mean per calendar year. You could write a check to somebody on December 31st for $15,000 and turn around on January 1st and write them another check for $15,000. If you're a married couple, the wife can give her son $15,000, the husband could give the son $15,000. That's pretty generous, pretty liberal. I think that that would answer the texter's question.

Attorney Chris Merrill: It would.

Attorney Tom Olsen: Chrissy, when we're talking about giving up to $15,000 per person per calendar year, I’ve been a lawyer for 40 years. Right now at this moment in time in the state of Florida, a single person could pass up to $11 million. A married couple can pass up to $22 million free of debt taxes, also known as inheritance taxes, also known as estate taxes. There have been times in my career where that number was closer to $350,000 per person. It's gone from being a very low exemption to a very high exemption. These days, very few people are over $11 million or $22 million. Back when it was only $350,000 per person, there was a lot of people that were over that amount. For those lot of people that were over that amount, they were doing what we called planned gifting. They were trying to bring down the size, the value of their estate knowing that if they didn't, they were going to face a very steep state tax rate.

Attorney Chris Merrill: At the end.

Attorney Tom Olsen: How did they do that? They did planned gifting. Every year they give their kids the maximum amount allowed. It was less than $15,000, but it is still pretty substantial, just as a way of bringing down the value of their estate.

Attorney Chris Merrill: They were giving things while they were alive versus waiting until they passed away?

Attorney Tom Olsen: Exactly. They bring down the net value of their estate so that when they passed away less estate taxes would be due.