A generous gift for a child’s wedding doesn’t necessarily cause a tax problem unless your lifetime gifts are over the lifetime exclusion limit, which is extremely high right now. A recent article from Yahoo! Finance, “Do I Need to Worry About the Gift Tax If I Pay $60,000 Toward My Daughter’s Wedding?” says most Americans won’t have to worry about the gift tax. If you are under the lifetime exclusion limit, you should not need to pay taxes on wedding gifts.
In 2025, the lifetime exclusion is $13.99 million per person and $27.98million for a married couple. Unless you’ve gone above and beyond these limits, you can make as many gifts as you like to anyone you choose without worrying or paying the 18% to 40% federal gift tax.
But there’s one thing to remember: if you make a gift over the annual gift limit, which is $19,000 per person in 2025 or $38,000 for a married couple, you need to send the IRS Form 709. The form should be submitted even if no gift taxes are due. It’s a simple and smart move.
How do gift taxes work? The federal gift tax doesn’t come into play often. Most gifts are tax-free simply because of the size of both the annual and lifetime gift exclusions. You can gift freely if you keep the limit in mind.
The lifetime exclusion for gift and estate taxes is so high right now that few Americans need to worry about it. If you are generously minded, you may gift $13.99 million (individual) and $27.98 million (married couple). The lifetime exclusion is just as it sounds: the number of gifts you may give during your life or as part of your federal estate.
If you are charitable-minded, you may make many contributions. There are no gift taxes levied on charitable donations, gifts to spouses, or gifts to political parties. As long as you pay directly to the institutions, there are no taxes on college tuition or healthcare expenses.
There are some strategies to manage the gift tax. One would be to split your $75,000 gift from you and your spouse between your daughter and her fiancé. Both gifts would be under the 2025 $38,000 per person exclusion, assuming you are married, so there would not be a gift tax.
Another tactic is to spread the gift out over a few years. Let’s say you’re a single parent. You could gift your daughter and her fiancé $15,000 each this year and next, keeping you well below the $19,000 annual gift tax exclusion.
If you’ve already made gifts over and above the $13.99 million lifetime exclusion, speak with your estate planning attorney to determine where you fall in the gift tax brackets and how much you’ll need to pay.
Reference: Yahoo! Finance (March 14, 2024) “Do I Need to Worry About the Gift Tax If I Pay $60,000 Toward My Daughter’s Wedding?”
