Dad wants to gift us money for 2025 - how does this work tax-wise?

Thanks for the clear explanation! So if he gives each of us $17,000 (or whatever the limit is for 2025), then there's no paperwork at all? Does he need receipts or any documentation for his records? And can the kids' money go into accounts we control, or does it need to be in their names specifically?

No paperwork at all if he stays under the annual exclusion amount per person. It's a good practice for him to keep basic records of the gifts (dates, amounts, recipients) for his own files, but nothing formal is required. For the children's money, he can either give it directly to accounts in their names (like 529 college savings plans or UTMA/UGMA accounts) or give it to you to manage on their behalf. From a gift tax perspective, as long as the money is truly intended for the children, it counts toward their annual exclusion. Just be aware that if he puts money in a UTMA/UGMA account, that money legally belongs to the child when they reach the age of majority (18-21 depending on your state).

Does it actually explain HOW to make the gifts? Like does the money have to be transferred on specific dates or does the tool tell you if it's better to do cash, check or bank transfers? My mom is talking about similar gifts but she's really paranoid about doing it wrong.

I'm curious - does this tool help with any special situations? My father wants to gift money but he's not a US citizen and lives abroad part of the year. Still has tax obligations here though. Would this work for international gift tax questions?

It walks you through the entire process including timing considerations and transfer methods. The tool specifically explains that the IRS doesn't care about the method of transfer (cash, check, bank transfer, etc.) as long as the gift is completed within the calendar year you're claiming it. It also covers what documentation to keep - basically just records of the transfers with dates and amounts. For international situations, it absolutely covers that too. The tool has specific sections on gifts from non-US citizens and foreign residents, including the different rules that might apply depending on your father's specific tax status. It breaks down exactly which forms would be needed and any potential treaty considerations that might affect the gift.

Wait, so this service just sits on hold with the IRS for you? How does that even work? And why would you pay for something like that instead of just calling yourself?

Sorry, but this sounds like a scam. Why would I trust some random service with accessing the IRS on my behalf? Has anyone actually had success with this? The IRS wait times are bad but they're not THAT bad in my experience.

The service doesn't access the IRS on your behalf - it just holds your place in line. It uses an automated system to stay on hold, then when it detects an agent is about to answer, it calls your phone and connects you directly. You're the one who actually speaks with the IRS agent, not them. The reason people pay for it is time. When my dad tried calling himself, he was on hold for 2+ hours multiple times and often got disconnected before reaching anyone. With wait times averaging 90+ minutes for tax law questions, it's worth it for many people to not have their phone tied up all day. And honestly, for some gift tax scenarios, yes, the IRS wait times really are that bad - especially during tax season or if you need to speak with someone in a specialized department.

Do you know approximately how much an estate attorney costs for a consultation? My parents are in a similar situation but are hesitant to spend money on professional advice.

Most estate attorneys offer initial consultations for $200-400, but the full estate plan can range from $1,500 to $5,000+ depending on complexity. But honestly, the cost is absolutely worth it. My parents' attorney identified tax savings and asset protection strategies that saved well over $50,000 in the long run. For perspective, they have a relatively modest estate (under $2 million). The attorney also helped coordinate beneficiary designations across accounts which would have caused major headaches if they'd done it wrong. If your parents have accumulated assets over their lifetime, professional advice is one of the best investments they can make.

Isn't there also a special provision for education expenses or medical bills? I think I remember reading that you can exceed the annual limit if you're paying those directly to the institution rather than giving cash to the person. Anyone know if that's correct?

Yes, you're absolutely right about the education and medical expense exemptions! These are called "qualifying transfers" and they're in addition to the annual exclusion amount. Your dad can pay unlimited amounts directly to educational institutions for tuition (not room and board) or directly to medical providers for medical expenses without it counting against the annual gift limits. The key is that the payments must go directly to the institution or provider - not to the person who would then pay the bills. So if your kids have college expenses coming up, your dad could potentially pay their tuition directly to the school AND still give each family member the full annual exclusion amount. This is a really powerful estate planning tool that many people don't know about.

This is really helpful advice about the timing and documentation! I hadn't thought about the December 31st deadline being so important. My dad tends to be a bit disorganized with paperwork, so I'm definitely going to stress to him how important those records will be. Quick question - when you mention documenting his "gifting strategy in writing," does that need to be anything formal or legal? Or would something like a simple letter explaining his intentions be sufficient for IRS purposes? I want to make sure we're covering all our bases since this sounds like it could save us major headaches later.