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Do I Have to Worry About Gift Tax?

If I Give My Child $30,000 Towards Their Wedding, Do I Have to Worry About Gift Tax?

Mark Henricks Sat, July 27, 2024 SmartAsset

Imagine your child is getting married and you want to help pay for their wedding. You’ve been saving for years and now have $30,000 set aside for their big day, which you plan to hand over in the form of a check.

However, before you pass along that much cash, it’s important to understand the potential tax implications of making a $30,000 gift. A gift that size could require you to pay the federal gift tax, which can reach up to 40%. The good news is you may avoid paying gift taxes altogether, but there are reporting requirements and other limitations to keep in mind. Consult a financial advisor to minimize your gift tax obligations.

If I Give My Child $30,000 Towards Their Wedding, Do I Have to Worry About Gift Tax?

Mark Henricks Sat, July 27, 2024 SmartAsset

Imagine your child is getting married and you want to help pay for their wedding. You’ve been saving for years and now have $30,000 set aside for their big day, which you plan to hand over in the form of a check.

However, before you pass along that much cash, it’s important to understand the potential tax implications of making a $30,000 gift. A gift that size could require you to pay the federal gift tax, which can reach up to 40%. The good news is you may avoid paying gift taxes altogether, but there are reporting requirements and other limitations to keep in mind. Consult a financial advisor to minimize your gift tax obligations.

Federal Gift Tax at a Glance

The federal gift tax applies when you transfer money or property to someone else without receiving something of equal value in return. Gift tax rates range from 18% to 40% based on the size of the gift.

However, not all gifts trigger this federal tax. The IRS allows you to give away up to $17,000 ($34,000 for married couples) per year to each individual without owing any taxes on the gift. This is called the annual exclusion, and in 2024 it will increase to $18,000 per person.

However, gifts that exceed this annual exclusion aren’t necessarily taxed either. Instead, they reduce the amount of money or property you can give away tax-free over the course of your lifetime. This lifetime limit is known as the basic exclusion amount or lifetime exemption and it’s adjusted each year for inflation.

The gift tax only applies when you exhaust your lifetime exemption. In 2023, a person can give away up to $12.92 million over the course of their lifetime without triggering the gift tax (this will increase to $13.61 million in 2024). For example, if someone were to give away $13 million, they would pay gift taxes on only $80,000. And if you need additional help planning for major gifts, consider matching with a financial advisor.

How the Gift Tax Could Affect a $30,000 Wedding Gift

If you want to give a child $30,000 to help pay for a wedding, there are a few different ways it could be structured.

As a gift solely from you to your child, a $30,000 wedding gift would avoid most tax liability on its own. The gift only exceeds the $17,000 annual exclusion for 2023 by $13,000, so that’s all that could potentially be taxable if you’re single.

If this is your first time exceeding the annual exclusion, there’s more good news. In that case, the $13,000 excess would simply reduce your $12.92 million lifetime exclusion by that amount. You would not actually have to pay any gift tax unless you exceed your remaining lifetime exclusion, though you still have to fill out Form 709.

Alternatively, you could gift both your child and their future spouse $15,000 each and avoid the annual exclusion threshold (remember, you can gift up to the annual exclusion amount per year per person).

To make sure you structure your gifts in your best interest, talk it over with a financial advisor.

How to Avoid Gift Tax on a $30,000 Wedding Gift

3 ‘Horrible’ Pieces of Tax Advice, According to The Money Guy Show

Catherine Collins Tue, April 1, 2025 GOBankingRates

The financial advisors behind the podcast ‘The Money Guy Show‘ recently reviewed popular TikTok tax hacks that are actually terrible money advice. In addition to being financial advisors, hosts Brian Preston and Bo Hansen are also accountants, so listeners can benefit from hearing their advice about what is and isn’t allowed when you file your taxes.

While the hosts aren’t against tax planning, many of the TikTok tax strategies they reviewed are less about planning and more about being misleading or even committing fraud. Many people turn to ‘The Money Guy Show’ for financial lessons that aren’t boring. So, if someone is interested in lowering their tax bill, this is a show to follow.

3 ‘Horrible’ Pieces of Tax Advice, According to The Money Guy Show

Catherine Collins Tue, April 1, 2025 GOBankingRates

The financial advisors behind the podcast ‘The Money Guy Show‘ recently reviewed popular TikTok tax hacks that are actually terrible money advice. In addition to being financial advisors, hosts Brian Preston and Bo Hansen are also accountants, so listeners can benefit from hearing their advice about what is and isn’t allowed when you file your taxes.

While the hosts aren’t against tax planning, many of the TikTok tax strategies they reviewed are less about planning and more about being misleading or even committing fraud. Many people turn to ‘The Money Guy Show’ for financial lessons that aren’t boring. So, if someone is interested in lowering their tax bill, this is a show to follow.

What’s important to remember is that if people need to get tax advice, they should follow the advice of an accountant. Not everything you see on TikTok is true, but sometimes people get excited about ways they can save money. Unfortunately, not all ways are valid.

Here are a few examples of bad Tik Tok tax advice, according to the pros at ‘The Money Guy Show.’ Also, learn how to avoid bad financial advice on social media.

Lease a Range Rover and Write It Off

The Money Guys reviewed a video where Grant Cardone told viewers they could write off a $150,000 Range Rover “100%” so long as they use it for business.

The IRS does have rules about using a car for business purposes, but how you can only deduct the business portion of how you use it.

The Money Guys explained you have to carefully track your mileage to write off a car as a business expense — you can’t write off any driving for personal use. Preston also pointed out, “‘Deductible’ is not ‘free.’ … You’re still paying 60 cents on the dollar.”

How Much Should You Add to Your Emergency Savings To Keep Up With Inflation?

Kerra Bolton Mon, March 31, 2025 GOBankingRates

Saving three to six months of emergency savings is a must, especially during times of economic uncertainty. However, rising inflation means that a $10,000 safety net might not be able to buy as much tomorrow as it does today.

GOBankingRates talked to financial experts to find out how much you should add to your emergency savings to keep up with inflation.

How Much Should You Add to Your Emergency Savings To Keep Up With Inflation?

Kerra Bolton Mon, March 31, 2025 GOBankingRates

Saving three to six months of emergency savings is a must, especially during times of economic uncertainty. However, rising inflation means that a $10,000 safety net might not be able to buy as much tomorrow as it does today.

GOBankingRates talked to financial experts to find out how much you should add to your emergency savings to keep up with inflation.

3% to 4%

Carson McLean, founder of Altruist Wealth Management, said individuals should aim to increase their emergency fund by 3% to 4% annually, assuming average inflation.

“For example, if your emergency fund is $30,000, aim to add an extra $900 to $1,200 each year, just to maintain its purchasing power,” McLean said.

Individuals can find the inflation rate by using the annual Consumer Price Index for All Urban Consumers published by the U.S. Bureau of Labor Statistics.

“Set an annual recurring calendar reminder to review the prior year’s inflation data and top up your fund,” McLean said. “Alternatively, set up an automatic savings transfer. For example, add $100 per month to your emergency account, which covers most inflation adjustments without much thought.”

The Exact Annual Inflation Rate

William Bergmark, a personal finance expert at Credwise, recommended that individuals use the annual inflation rate to calculate how much they should add to their emergency savings.

“For example, if you’ve saved $20,000 and inflation is 5%, you’ll have to put in at least $1,000 that year,” Bergmark said. “Inflation gradually erodes the purchasing power of your money — just letting it sit in the bank. So, it is a must to continuously build your emergency fund.”