Maximum amount you can give as a gift

Question

how much can you gift your kids without them having to report it on their income tax and can you gift them every year without penalty?

Answer 1

There is no limit.  Gifts are NEVER reported as income by the recipient.

On the other hand, YOU may have to pay Gift Tax if you give away enough in your lifetime.  You are allowed to give up to $12k per year to each of an unlimited number of recipients without having to file a Gift Tax return.  Once you exceed the $12k annual limit per recipient you must file a Gift Tax return.  The excess over $12k will first be applied to your lifetime exclusion of $1,000,000.  Once you use up the lifetime exclusion you will start paying gift taxes.  

Keep in mind that the Gift Tax lifetime exclusion is tied to the Estate Tax exclusion and reduces it dollar-for-dollar so if you dip into the lifetime Gift Tax exclusion it may affect the taxable value of your estate when you die.

Answer 2

In addition to the great answer already given- remember that the exclusion is per person, per recipient.  You can give much more if done properly.  To avoid a gift tax return, you can do the following (without gift splitting)

You write a check to child A for $12,000

Your spouse writes a check to child A for $12,000

You write a check to the spouse of child A for $12,000

Your spouse writes a check to the spouse of child A for $12,000

Assuming no other gifting takes place during the year, you just transferred $48,000 out of your estate without needing to file a gift tax return.

Answer 3

Read about gifts and tax http://taxipay.blogspot.com/2008/03/us-g...  

Answer 4

You can gift them as much as you like without there being any tax consequence to them.  If you give any one person more than $12,000 in a given year you must file a form 709 reporting the gift.  You are exempt from any gift tax for the first $million in your life time.  This will also have an effect on your estate at the time of your passing but that changes from time to time and we hope that your passing will come far enough down the road that it has change a good number of times.