Wrong, and not so simple. Any gift or combination of gifts from one person to another in a particular tax year generally cannot exceed the annual gift tax exclusion ($17k in 2023) without triggering an IRS reporting requirement. Spouses can double up on the annual exclusion amount so that in 2023 together they could gift $34k to another person without facing the reporting requirement. But needing to report a gift over the annual exclusion amount on IRS Form 709 in almost every case will not mean that there is a tax burden (obligation to make a tax payment). In order to actually owe tax for making a gift, the gift-giver would need to exceed the lifetime exemption amount, which currently is $12.92 million. So, a grandparent could give $1 million to a grandchild this coming Tuesday for a Halloween gift, and while this would require the grandparent to file IRS Form 709 to report the gift (since it’s over the 2023 annual exclusion amount of $17k), there would be no additional tax owed by the grandparent, unless the grandparent had already exceeded or with this gift was exceeding the $12.92 million lifetime exemption for all previous gifts given that were above the annual exclusion in effect during the year of previous gifts.
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