In today’s episode, we’re tackling these topics:
🧾 Gifts over the limit require filing IRS Form 709
🧱 Using appreciated stock instead of cash to potentially lower taxes
📉 Kids in lower tax brackets can sell gifted stock at reduced or zero tax
📝 Family loans are an alternative to large gifts and offer more control
🧠 Gifting strategy should consider estate size, tax brackets, and family dynamics
Listen Now:
The Smart Take:
Many parents and grandparents want to help family financially, but gift tax rules are often misunderstood.
In this episode, Tyler Emrick, CFA®, CFP®, breaks down the 2026 gift tax rules in plain English, including how much you can give without triggering tax, when gifting appreciated stock makes sense, and how to properly structure family loans using IRS guidelines. We also explain when a gift tax return is required—and why filing one doesn’t necessarily mean you’ll owe tax.
If you’re considering gifting money to children or grandchildren, this episode will help you do it the right way.
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The Hosts:
Kevin Kroskey, CFP®, MBA – About – Contact
Tyler Emrick, CFA®, CFP® – About – Contact
Episode Transcript:
Tyler Emrick:
Are you a parent or a grandparent who wants to help your family out financially but the gift tax rules are making your head spin? Today, we got you covered with the updated 2026 numbers and what you need to know.
Walter Storholt:
We’re back again on Retire Smarter. Welcome to today’s podcast. I’m Walter Storholt. As always, joined by Tyler Emrick, certified financial planner and a chartered financial analyst at True Wealth Design. You can find us online at truewealthdesign.com. And I’m excited for the episode today, Tyler, because we’re talking about gift taxing. I think this is something that trips off-
Tyler Emrick:
Gifting. Don’t pay tax. Gifting.
Walter Storholt:
Oh, gifting?
Tyler Emrick:
Come on, a gift from the family.
Walter Storholt:
You take the tax part out. I’m sorry.
Tyler Emrick:
Gifting. Gifting. Yeah. No, just kidding. Taxes are important and we’re going to definitely cover it today but how can you not get excited about family gifting? Come on.
Walter Storholt:
That’s the good stuff. Yeah, we’re not getting excited about gift taxing. You’re right. You’re right.
Tyler Emrick:
Oh no, I heard tax, Walt, and I was like, “Oh no, taxes. No. No. No [inaudible 00:00:57]”
Walter Storholt:
It’s not cause for excitement. Okay.
Tyler Emrick:
[inaudible 00:01:00]
Walter Storholt:
Well, see, part of the episode today was clearing up confusion. Right there, we’ve identified confusion right off the bat.
Tyler Emrick:
There you go.
Walter Storholt:
We’re going to get it all cleared up on the episode today. But this is important because who doesn’t want to be able to help their family? And if you’re in a position to do so, how awesome. But let’s do it the right way, let’s do it the most efficient way. And I know that’s what you’re going to help us get to the bottom of today.
Tyler Emrick:
Yeah. Oh, inevitably, we go to a new year, limits get updated, considerations may be changed, we have the new tax legislation that passed. You never know how these things change from year to year. The question comes up quite a bit around just like, “Hey, I want to gift one of my children X amount of dollars to help them through a tough time.” Or whatever the case is. And there’s always this little gray area, Walt, of like, “Well, do I need to claim it on my taxes? Is it going to be taxable to them? What should I gift?” That type of thing.
Today we just want to clear up some of that confusion, really give you some key points that you need to know for 2026 gifting limits. And remember, when we’re saying gifting, I want to be very clear. Well, we’re talking about really family and friends here. We’re not talking about your typical charitable gifting where you can actually get a tax deduction for it if you itemize your deductions. Or obviously with the new legislation that passed 2026, you get an above the line deduction for your charitable giving as well. We’re not talking about that. This is like, “Hey, you want to support or help out a family member in some way, shape, or form. How can you best do it and what are some of the things you need to know?” That’s what we’re going to cover today for sure.
Walter Storholt:
I think it’s great because a lot of people also assume that gifting, or at least maybe they just don’t know, is just like cash, this is a cash conversation. But we’ll dabble in even broader than that. Stocks. What about loans? Is that handled differently if you expect… Because a lot of family help arrangements involve some sort of payback at some point so how does that get classified? A few nuances I think that are important to cover too.
Tyler Emrick:
Yeah. And I think the first start is, well, what limits do you need to be mindful of? Because this is certainly going to drive a lot of that discussion. And the first one that you want to think about here is what’s called the annual exclusion amount, this is the amount that you personally can give to any individual in a given tax year and you do not need to report it on your tax return or there is no taxes due or anything like that. And Walt, that number is $19,000. You can give $19,000 to me, the IRS does not care, Walt. They will let you do that and you do not need to report it. Likewise, Walt, that is…
Walter Storholt:
I don’t want to make any promises though, Tyler, just so we’re clear here.
Tyler Emrick:
Fair enough. Fair enough. But hey, the seed is planted. Now you know, hey, 19K, that is the limit. And if you’re married, your spouse can give $19,000 as well which is a little bit of a caveat here. Let’s say you’re trying to gift to your daughter, helping with a downpayment on a house. Well, you can gift $19,000 and then your spouse can give $19,000 as well. That’s a pretty hefty amount, 38,000 bucks that if you’re married that you can gift to an individual in a given year and really there is nothing that needs to be reported whatsoever.
Now, of course, things change if you want to gift more than that, which we’ll finish up the podcast today on that. But next we want to start thinking about, you alluded to this a little bit earlier is, well, what do you gift? The first thing is the amounts. You don’t have to worry about it if it’s below $19,000 to one person. If it’s above 19, got to worry about it. We’ll talk about that here in a little bit. But I think the thing that we also need to touch on, which often gets really overlooked is what do you gift them?
A lot of times, to your point, it’s just like, “Hey, cash or check, here you go.” But a lot of times, especially if you’re thinking about your children and they’re just getting started out, it might make a lot more sense for you to gift some of your highly appreciated mutual funds, ETF, stock positions that you’ve had for a number of years. Gift those to your children, let them sell it, let them realize the gain. And if their tax situation warrants it, they could probably be in a lot more favorable situation than you if you were to sell that same position, realize the gain, and let it hit your tax return.
For example, hey, you invested in Apple stock a long time ago and now it’s worth 20 grand. But when you got in, it was only $2,000, that’s your basis. If you were to sell that Apple stock, $18,000, if that’s not in your taxable brokerage account, that $18,000 then goes right down to your tax return. If you’re in a higher tax bracket, you might be paying 15, 18, 20, sometimes higher percent if you’ve held that investment for a long period of time. They call that long-term capital gains.
Whereas you might be able to gift that same $20,000 of stock to your son who just graduated college, has minimal income. He might be able to sell that, have the $18,000, then hit his tax return. And since he only worked part of the year, hasn’t maybe started his full-time job, he can maybe pay no tax on that stock sale which as you’re starting to think about bigger dollar amounts or some of these highly appreciated positions, I think it can be extremely powerful and oftentimes overlooked as you start thinking about that coordination of all the family’s tax returns and how those assets can best be used for the wealth creation.
Don’t always just gift cash. Should you be gifting some of your highly appreciated stock positions if your child or family member or friend is maybe in a lower tax bracket than you?
Walter Storholt:
Yeah. It could make the difference in a few thousand dollars just from that example.
Tyler Emrick:
Oh, absolutely.
Walter Storholt:
And then if you go to the level of the couple giving the combined amount, then it just amplifies.
Tyler Emrick:
It amplifies quite a bit. Yeah. We find ourselves gifting stock a lot. Lots of children, as you can imagine, right? The down payment on the house, that type of thing is a big one that we see, maybe paying off school loans or something like that that we’re taking off. All sorts, whatever the purpose is. Thinking through what gets gifted to your kids or friends or family, I think is extremely important.
We talked about, hey, 19 grand per person that can be gifted. We talked a little bit about, hey, don’t always just gift cash. Gift stock. What else is there to consider? Because some of you might be thinking, “Well, hey, I’m in a really good spot. I want to gift more than 19 grand to my son or daughter. What does that entail or what consequences does that have?” What that’s going to do is that is going to trigger you to file Form 709, which is called a Gift Tax Return. Alongside you filing your normal tax return, you are going to have to file this gift tax return.
And this is really an informational tax return to the IRS. This is you telling the IRS, “Hey, I went over that $19,000 limit that you had. I want to report it to you.” And what the IRS is going to do is then they are going to lower what’s called your lifetime exemption amount, which this is the amount of gifting that you can do over your lifetime or how big your estate can be at your passing before you owe federal gifting or inheritor tax on that money. And right now, it’s a pretty hefty $15 million per individual, $30 million if you’re married.
If you’re listening to this going, “Boy, I’m never going to have a $30 million estate, my spouse and I.” Well, then what you’re doing by filing this gift tax return is you’re just lowering that amount. There is no tax consequences when you file that gift tax return. Again, it’s just informational. Certainly, your CPA might charge you for filing the return but that’s really the only thing out of your pocket. It’s not like that your son or daughter is going to have to file a return and pay taxes on that gift or anything like that. All it’s doing is lowering that lifetime exemption amount down. And as long as you got plenty of wiggle room there, there’s not going to be much of a ramification. Now, certainly [inaudible 00:09:07] type of thing.
Walter Storholt:
There’s really no consequence? There’s really no consequence to giving more than the $19,000. It’s just you have to report it and it pulls from that huge lifetime giving amount.
Tyler Emrick:
Correct. Now, that lifetime exemption amount can change. That’s what could… Potentially, that could go down, that could change [inaudible 00:09:25]
Walter Storholt:
Say they take it down to a million all of a sudden and you’ve been over-giving by a lot.
Tyler Emrick:
Yeah. There are circumstances here where you just want to certainly be mindful of it. But in that scenario where you’re like, “Hey, I’m never going to hit $30 million, my spouse and I net worth. We’re maybe not even close to that.” Then yes, from a logistical standpoint, it’s more about just getting the appropriate tax document filed and you go about your way.
Now, that brings us to our final point here as we start thinking about, well, what if you don’t want to file that gift tax return? What if you’re worried about your estate potentially growing or you’re worried about laws changing and you don’t want to necessarily use that lifetime exemption amount? What are your options? Well, this is where a potential family loan could come into play. This is where you actually formally loan the money to the individual, you draft up documents with an attorney. And essentially there are repayment terms, there are certain interest rates that you need to charge called AFR rates that vary by length of term that you are expecting a repayment or whatever the case may be.
These loans can be very flexible. You don’t have to necessarily require a fixed repayment or an amount that be repaid. They could be managed a multitude of ways and these family loans can be a wonderful way for you to potentially gift. You don’t necessarily have to say that you’re going to have them paid back. There are things that you can get out, some terms that you can potentially build into these loans to make them a little bit more flexible, all sorts of things that you can do with the family loans to get out of having to file that gift tax return or if your estate is above that lifetime exemption amount where these can really come into play.
Family dynamics, spouses, high risk jobs where your kids can get sued, things like that. All these things can go into why you might want to do a family loan versus just an outright gift. But from time to time, these family loans come up and they’re a really good tool to have in your toolbox depending on the situation and what you’re trying to accomplish.
Walter Storholt:
Yeah. Very cool. Great breakdown on all of these things. Tyler, I’m sure this conversation is just one of many that you have with clients when you go through their full-blown financial plan and all the nuts and bolts that we often talk about here on the show. I know we’re narrowing in on a very small scope of that conversation on today’s show. But if you’re a longtime viewer of True Wealth Design or listener to the podcast here on Retire Smarter, and you’d like to have a conversation a little bit more in depth about how to best prepare for your financial future, for retirement, those kinds of things. If you’re not talking about this kind of stuff with your current financial advisor, maybe time for a second opinion.
Well, you can get that with True Wealth Design. In fact, a free chance to explore if you’re a good fit to work with one another. It’s a 20-minute discovery call and you can schedule that by clicking the link in the description of today’s show or by going to truewealthdesign.com and schedule that time to visit at your convenience.
Any other details, Tyler, or does that wrap us up today?
Tyler Emrick:
No, I think that wraps us up. It’s fun.
Walter Storholt:
Yeah. Good thoughts on this today, Tyler. And hopefully, this sparks some interest from folks who might be thinking a little bit about gifting to family this year and realizing, my big takeaway, it’s a lot more flexibility than I thought than I assumed went into today’s conversation.
Tyler Emrick:
Absolutely.
Walter Storholt:
All right. We’ll see you everybody next time right back here on Retire Smarter. Take care.
Speaker 3:
Information provided is for informational purposes only and does not constitute investment tax or legal advice. Information is obtained from sources that are deemed to be reliable but their accurateness and completeness cannot be guaranteed. All performance reference is historical and not an indication of future results. Benchmark indices are hypothetical and do not include any investment fees.