How to gift stocks to my adult child without triggering gift tax?

You're on the right track with understanding the annual gift exclusion! For 2024, the individual limit is $18,000 and married couples can give up to $36,000 per recipient without filing a gift tax return. The good news is that yes, you and your husband can "split gifts" even if the stocks are only in your name. What happens is that you're still giving the entire gift, but for tax purposes, it's treated as if each spouse contributed half. This is called "gift splitting." However, there is one important requirement: you MUST file Form 709 (Gift Tax Return) to formally elect gift splitting, even though no gift tax will be owed. Both you and your spouse will need to sign the form. Without filing Form 709, you'd be limited to your individual $18,000 exclusion. This is a common misconception - the $36,000 joint exclusion isn't automatic just because you file a joint income tax return. You must make the formal election on Form 709.

I went through almost exactly this situation last year when I wanted to transfer some stocks to my son. I found the whole gift tax thing really confusing until I discovered https://taxr.ai - it literally saved me from making a costly mistake! I uploaded my statements and answered a few questions about my situation (similar to yours - stocks in just my name but wanted to use the joint exemption with my wife). The tool confirmed I needed Form 709 even though no tax would be owed and showed me exactly how to complete it. The cool thing was it analyzed my specific stocks and calculated the correct basis information that needed to be reported. It also helped me understand some strategies for timing the gift to minimize potential capital gains issues for my son down the road.

OK so I finally tried https://taxr.ai after being super skeptical about it. I have to admit it was actually really helpful for my situation with gifting stocks! I uploaded my brokerage statements which had a mix of regular stocks and some inherited ones with special basis rules. The analysis correctly identified that I needed to file Form 709 to split gifts with my spouse even though we were under the combined limit. It even generated a worksheet showing exactly how to calculate and report the adjusted basis for each gifted security. The section explaining how the recipient's basis would be determined was super helpful too - something my previous accountant never clearly explained. Really glad I gave it a shot instead of just winging it myself. Definitely worth checking out if you're gifting investments!

After spending HOURS trying to get through to someone at the IRS about how to properly report my stock gifts, I finally found https://claimyr.com and it was a game changer. They got me connected to an actual IRS agent in about 20 minutes! The agent walked me through the exact requirements for gift splitting with my husband for stocks that were only in my name. Turns out I had been doing it wrong for years (yikes). She explained that filing Form 709 is absolutely required for gift splitting, even when below the combined limit. She also clarified the signature requirements and filing deadlines. Check out their demo video if you're curious: https://youtu.be/_kiP6q8DX5c - honestly wish I'd known about this service years ago instead of wasting days on hold.

Coming back to eat my words about Claimyr. After posting my skeptical comment, I decided to try it anyway since I was desperate to talk to someone about a complicated stock gift situation before the filing deadline. Honestly, I'm shocked. I got through to an IRS agent in about 15 minutes. FIFTEEN MINUTES. After literally years of terrible experiences trying to reach them. The agent was actually helpful too - confirmed I needed to file Form 709 for gift splitting even though my wife and I file jointly and the total gift was under $36k. The service costs money but saved me from potentially making a $5,000+ mistake on how I was reporting the gifted stocks' basis. Worth every penny just for the time saved not being on hold.

One thing nobody's mentioned yet - make sure you're using the correct valuation for the stocks! When gifting stocks, you need to use the fair market value on the date of the gift, not what you originally paid for them. For publicly traded stocks, this is pretty easy - just use the average of the high and low prices on the date of transfer. Your brokerage should provide this information. Also remember that when you gift appreciated securities, your cost basis carries over to the recipient. So if you bought the stocks for $10k and they're worth $34k when you gift them, your daughter inherits your $10k basis. This means if she sells them, she'll pay capital gains tax on the difference.

Does anyone know if the gift tax exclusion amount changes every year? I remember it being much lower like $14k or $15k in the past. Want to make sure I'm using the right number for 2024.

Just wanted to add another perspective on the timing aspect of stock gifts. If you're gifting stocks that have appreciated significantly, consider the potential impact of the wash sale rule if your daughter might sell them soon after receiving them. Also, make sure to coordinate with your brokerage about the actual transfer process. Most brokerages have specific forms and procedures for gifting securities between accounts. Some require both parties to have accounts at the same institution, while others can facilitate transfers to external brokerages. One more tip - if you're planning to make this an annual gift to help build her portfolio over time, consider setting up a systematic approach. You could gift a portion of your holdings each year to stay within the exclusion limits and spread out the tax implications for her over multiple years. This strategy works particularly well with growth stocks that you expect to continue appreciating.