Technically speaking, you can give any amount of money you wish as a gift to one or more of your children or any other member of family. Some parents also choose to buy property and put it into their child's / children's name(s).
Generally, a person receiving a gift from their family does not have to pay gift tax until a donation exceeds $18,000 (this amount increases to $19,000 in 2025). A gift tax is a government tax imposed on those who give money or property to others in exchange for nothing (or less than total value).
In the US, a person can give gifts up to $5340000 throughout their life without ever needing to pay gift tax. So unless your family member has already given away more than 5 million dollars, he or she has nothing to worry about (source). You won't ever have to pay taxes on money gifted to you.
You don't need to claim or report money gifted to you, so no. Technically if your parents give above the IRS limits, they would need to file a gift-tax return, but there's still no taxes on the amount gifted, it just reduces their lifetime gift allowance from the IRS.
Bottom Line. The exclusions to the federal gift tax mean you can probably give $50,000 to each of your children without owing any tax. Since a gift of that size is more than the current annual exclusion of $18,000, you would have to file Form 709 to report the gift to the IRS.
It's not illegal to take money from your kids in most cases, although, of course, there are exceptions, like if the child's money is in a specific trust and you abuse the funds.
The primary way the IRS becomes aware of gifts is when you report them on form 709. You are required to report gifts to an individual over $17,000 on this form. This is how the IRS will generally become aware of a gift. However, form 709 is not the only way the IRS will know about a gift.
Paying kids an allowance develops their financial skills and helps them to make smarter decisions about money as adults. It also encourages them to be financially independent rather than relying on their parents for money.
According to Carbrain, you may or may not have to pay taxes when you give or receive a car as a gift. It all depends on what state you live in. California residents who are gifted a vehicle can apply for a tax exemption at the Department of Motor vehicles.
Tax benefits of gifting money to family members
For smaller gifts, the IRS rules for 2025 allow any individual to gift up to $19,000 per year to any recipient without having to consider the potential impact of a taxable gift. A married couple filing jointly may give up to $38,000 to any individual.
You don't need to include the gifts that you and your spouse received as income. This is because gross income doesn't include the value of property you get by: Gift.
Parents can make an outright gift of a home to an adult child. Any gift that exceeds the 2024 annual exclusion of $18,000 will be subject to gift tax and require that a gift tax return be filed.
There is no universally correct age that parents should stop supporting their children once they reach adulthood, as each family will need to make the determination based on what is best for their wallets and to best support their values.
The IRS generally holds the giver liable for taxes. And unless the person is handing over a small fortune, he or she won't owe any gift taxes either. But if your parents are being generous, you might want to fill them in on how the IRS views the transfer of money.
If someone else pays off your mortgage or another significant debt, it could be considered a gift under tax laws.
While you can give your son or daughter a cash gift of £20,000 (or more), there may be tax implications.
“A good rule to live by is to save 10 percent of what you earn, and have at least three months' worth of living expenses saved up in case of an emergency.” Once your teen has a steady job, help them set up a savings program so that at least 10 percent of earnings goes directly into their savings account.
Using a standard calculation, an individual earning $1,000 a week might pay around $250 per month for one child, though this figure can vary significantly based on specific circumstances and local county guidelines.
Bottom Line. California doesn't enforce a gift tax, but you may owe a federal one. However, you can give up to $19,000 in cash or property during the 2025 tax year and up to $18,000 in the 2024 tax year without triggering a gift tax return.
A gift letter is a formal document proving that money you have received is a gift, not a loan, and that the donor has no expectations for you to pay the money back. A gift can be broadly defined to include a sale, exchange, or other transfer of property from one person (the donor) to another (the recipient).
No, you do not have to report money you receive as a gift as income. While any gift may be taxable, the recipient of the gift does not have to pay the gift tax. And the person who gives you the gift only needs to file a gift tax return if it's more than the $18,000 annual exclusion.
All income from the gift will be taxed as if it were yours. This is to stop parents trying to get a tax break on their own money by using their children's allowances. This rule doesn't apply to grandparents or to gifts from parents to their children's JISAs.
So legally speaking, no. Even for minors, the law on personal property applies the same as it does to adults. This means that if you paid for your own phone and you are paying for it from your job, your parents have no right to take it from you at all. Technically, you could sue them for that.