[gnicholas]

I wouldn't characterize GP as "pretty much wrong" — I would say that one line left out that it's an annual gift limit.

Also, there is an 11M lifetime limit that can be tapped beyond the annual gift amount. However, you generally have to file forms when you make such gifts. [1] So although you can give up to $11M during life, you will likely need to file forms in order to not get into trouble. Also, if you have an estate plan, it was very likely drafted with the understanding that you have your entire $11M left intact at death, which allows for certain estate planning techniques. If you have blown through a bunch of it during life, you may wreak havoc on the carefully laid plans of your trust/estate.

1: https://www.irs.gov/instructions/i709#:~:text=If%20you%20are....

[henrikschroder]

> I wouldn't characterize GP as "pretty much wrong" — I would say that one line left out that it's an annual gift limit.

GP said that gifts are taxed if you exceed the annual limit, and this is 100% wrong. The only way you can be taxed on gifts is by exceeding the lifetime limit.

The annual limit determines if you need to report your gift to the IRS or not, but nothing else.

If you stay below the annual limit every year, you will never exceed the lifetime limit, unless you and the recipient live to 140 or something, so the different limits are related, but that's it.

[gnicholas]

> The annual limit determines if you need to report your gift to the IRS or not, but nothing else.

It can lead to problems with your estate when you die, and result in penalties and interest (from the date of the gift). See https://www.forbes.com/sites/bobcarlson/2022/02/24/avoid-the...

> If you stay below the annual limit every year, you will never exceed the lifetime limit, unless you and the recipient live to 140 or something, so the different limits are related, but that's it.

Actually, if you stay below the annual gift limit every year, you can never exceed the lifetime limit. Only gifts in excess of the annual limit count toward the lifetime amount.

[dragonwriter]

> GP said that gifts are taxed if you exceed the annual limit, and this is 100% wrong.

No, he said “only if” not just “if”, and this is precisely, 100% correct:

X only if Y = X does not occur except when Y occurs (but does not specify whether X cab fail to occur if Y occurs)

X if Y = X always occurs if Y occurs (but does not specify if X can occur without Y)

X if, only if, Y (sonetimes written X iff Y) = X occurs always and only when Y occurs.

(Actually, he said “are taxable”, not “are taxed”, so “only if” would also be correct, more on that below.)

> If you stay below the annual limit every year, you will never exceed the lifetime limit, unless you and the recipient live to 140 or something

No, for two reasons: one, gifts that are below the annual exclusion aren’t taxable and don’t count against the lifetime exemption. Secod, even if you just passed the exclusion for a single recipient (so, you had a taxable gift $1 more than the exclusion level each year—note, the full amount is taxable if you exceed the exclusion), you would never (given historical relationship) reach the lifetime exemption, which annually has increased by more than the annual exclusion.

Gifts of the type subject to tax, to a single recipient, in a single year, exceeding the annual exclusion amount are taxable and must be reported. (Note that the annual exclusion is per recipient from a donor.)

But taxable gifts are only actually taxed on the amount the donor has exceeded the current lifetime exemption (across all recipients).