We oftentimes talk to clients who want to help their children and grandchildren with gifts, but there is always uncertainty around the tax implications.
Here is the bottom line – unless your lifetime gifting and inheritance you leave behind (combined) is greater than $15M per person in 2026 ($30M) per couple, you are not going to owe any estate taxes on your gifts/inheritances you leave behind.
Let’s take a deeper dive look on how this works…
1st, you should understand how the annual gift tax exclusion works.
The Annual Gifting Exclusion
There is an annual gift exclusion that allows you to gift up to $19k per person (in 2026, increasing with inflation) with no reporting. If you are married, you can gift $38k per child/grandchild with NO reporting.
What happens if you report taxes as a single filer and gift $19,001? Is that $1 taxed? No, it is not taxed; however, it is reportable. There is a difference between a reportable event and a taxable event; some items are reportable and taxable. And some items are reportable and not taxable to you (e.g., $ gifts in excess of the annual exclusion, in this case the $1).
If you do gift over your annual exclusion, you or your tax professional will file IRS Form 709 to report the excess over your annual exclusion amount that you gifted ($1 in the example above).
Who is responsible for gift tax reporting? It is the gifter who is responsible, not the receiver.
Let’s look at another example. If you are married and feeling extra generous, and want to gift the maximum amount to your daughter and son-in-law. You can gift $76k ($38k to your daughter and $38k to your son-in-law) with zero reporting and zero gift tax consequences. That is $19k per parent per daughter – and $19k per parent per son-in-law.
Here’s an example that we have seen in the past:
Mr. and Mrs. Jones pay off their daughter and son-in-law’s mortgage, in the amount of $300k. By paying off the mortgage, they are gifting $300k, of which $76k may be excluded for the year. The additional $224k above their annual gift exclusion is reportable on IRS Form 709, and the $224k also reduces their lifetime estate and gift exemption of $30M jointly ($15M each), down to $29,776,000. As you can see, Mr. and Mrs. Jones still have a long way to go before they meet a taxable estate situation. They will report $224k on Form 709.
Conclusion
Gifting is rarely about taxes—it’s about intention. It’s about helping the people you care about in a way that aligns with your values and your long-term plan.
The key takeaway is this: most families will never face a true gift or estate tax problem, but many unintentionally create confusion, stress, or missed opportunities by not understanding the rules. That’s where proactive planning matters.
At Vocare, we don’t just answer the question, “Can I do this?”
We help you understand how to do it thoughtfully, confidently, and in coordination with your broader retirement and legacy plan.
Our role is to replace uncertainty with clarity—so you can give generously, plan intentionally, and move forward with confidence.
We want you to Retire With Purpose!
The Vocare Wealth Advisors Team
Any opinions are those of Vocare Wealth Advisors and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. Raymond James and its advisors do not offer tax or legal advice. You should discuss any tax or legal matters with the appropriate professional. Investing involves risk and you may incur a profit or loss regardless of strategy selected, including diversification and asset allocation. Prior to making an investment decision, please consult with your financial advisor about your individual situation.
