If a single person gives more than $16,000 in cash or assets (e.g. stocks, real estate, a car) in a year to any one person without expecting to receive something of equal value in return, they will need to file a gift tax return. However, breaching the $16,000 maximum doesn’t mean they have to pay a gift tax. It simply means they need to file IRS Form 709 to disclose the gift.
This safe harbor amount is known as the gift tax exemption, and it changes from year to year based on inflation.
Also keep in mind two additional points. First, the $16,000 gift tax annual exclusion is per recipient. So, a person could gift $16,000 to several individuals without having to file a gift tax return.
Second, the exclusion is also per giver. This only works for spouses, but for married couples, each spouse could give $16,000 to the same person, for a combined total of $32,000. Again this does not trigger the need to file a gift tax return.
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