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My mother wants to gift me money. How much can I receive tax free?

by Matthew Crisafulli

This post was the answer to a question originally posted on nerdwallet.com.

Short answer: $14,000/year and no gift tax return would be required. The “total gift” depends on a lot of factors, such as the decisions of congress and prior gifts your mom may have made.

Long answer: Technically she can give you any amount and it would be tax free to you because the gift giver pays the tax bill for any gifts over $14,000.  But even if your mom gave you more than $14,000, she would probably still not owe any tax.

The way the gift tax works is, any gift over $14,000 is reported on a gift tax return, and the difference between the gift (lets say she gives you $20,000) and the annual exclusion (currently $14,000) is taxable to your mom. That hypothetical $6,000 difference, then comes out of you mother’s lifetime gifting allotment, which is currently set at $5.43 million for 2015. Because it comes out of that lifetime gifting allotment, your mom would have to report the gift, but would not have to pay any gift tax (assuming there haven’t been prior large gifts that have already eaten away at that lifetime gifting allotment).

The reason the “total gift” amount cannot be determine is that 1) the $5.43 Million number increases each year and 2) that is one of the many items that comes up in congress time and time again, specifically whether or not to lower the gift exclusion from it’s current $5.43M, which increases with inflation, to a flat $3M that will not be tied to inflation.

Hope that helps.