MW My husband and I are giving my sister $30K each year. Will we owe the IRS gift tax?

By Quentin Fottrell

'We do not see eye to eye on using paper checks'

"My husband and I do not see eye to eye on using a paper checkbook, but that's a story for another day." (Photo subjects are models.)

Dear Quentin,

My husband and I have started giving money to my sister to help her out. It's going to be about $30,000 a year for the next five or so years at least. Will this sum be more than the amount the IRS allows us to give without triggering federal gift-tax paperwork?

Do we have to be careful to not give more than the one-person limit from a separate checking account? Our finances are joint and we file a joint tax return, but I have a separate checking account, and I make any Zelle and Venmo payments from there.

Is it OK to just use that one account for the payment? It will be a $1,000 payment every week for 30 weeks each year. We do not see eye to eye on using paper checks because of the speed. etc., of that method of payment, but that's a story for another day.

Wife & Sister

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You can email The Moneyist with any financial and ethical questions at qfottrell@marketwatch.com. The Moneyist regrets he cannot reply to questions individually.

The IRS will view a contribution from your separate account as a gift from you alone and a from your joint account as a gift from both you and your husband.

Dear Wife & Sister,

You are generous - and well within the parameters of federal gift-tax limits.

That's a win-win for you and your sister. You and your husband would be liable for gift tax if you went over the limit. The annual gift-tax exclusion amount is currently $19,000 per person, or $38,000 if you are married and the gift is made with the agreement of your spouse. The IRS will view a contribution from your separate account as a gift from you alone and a from your joint account as a gift from both you and your husband. (The lifetime federal estate and gift tax exemption for 2025 is $13.99 million per individual. For a married couple, this amount is effectively doubled to $27.98 million.)

The IRS does not care much whether you send the money via Zelle, Venmo or carrier pigeon, as long as you account for it accurately and honestly. Your sister is fortunate to have such generous family members, and I hope that she puts this money to good use, whether it's for her living expenses, education or paying off debts. One cautionary note: If it is for the latter, she may benefit from debt counselling and a more hands-on approach to her money management to help her figure out her triggers for spending money and any unhealthy patterns of behavior.

Setting up a trust

"One concern many people have about giving assets away early is that sometimes the person receiving the gift may not be ready to handle the responsibility of managing such a large amount of money," according to Charles Schwab. "One way to give those assets, but ensure they are protected from misuse, would be to give them to an irrevocable trust and make the child or teenager the beneficiary." That can also be useful for an adult family member who is not good at managing money.

This gives you more control. "This method allows you to set the rules of the trust and determine how the assets will be invested and distributed," Schwab says. "For instance, you could create a trust that stipulates the beneficiary can only have access to the income generated by the assets - or you could set specific rules, such as requiring the beneficiary to graduate from college before having access to the funds in the trust. There are numerous options when it comes to structuring a trust, and each state has its own rules."

There are also other ways to give money tax-free. "You can also make unlimited payments directly to medical providers or educational institutions on behalf of others for qualified expenses without incurring a taxable gift or affecting your $19,000 gift exclusion," Schwab $(SCHW)$ adds. "This method is a great way to help a loved one with large medical bills from an illness or to help pay for a family member's education. For example, say you wanted to pay your granddaughter's $60,000 annual tuition for her medical degree. You could pay the university directly."

Writing paper checks

Finally, a postscript on paper checks, since you bring them up. They are slower and more vulnerable to being intercepted by fraudsters. A bank takes time to process a check in order to ensure the check's validity. The Better Business Bureau recommends signing checks in black gel ink, which it says is more difficult to tamper with than regular blue or black pens. Checks are an old-fashioned payment method and rely on a legacy network to process payment or return checks. For instance, an income-tax refund can take anywhere from three to eight weeks to arrive by check.

A common scam is when consumers are fooled into cashing a check for a third party. The scammer tells a person with a U.S.-based bank account that they inherited a large sum of money and offers the person a generous commission to deposit the amount and wire the scammer the rest of the funds. However, the check is later returned and the customer is on the hook for the wired funds. (This scary New Yorker story on the subject may change your view on paper checks permanently.) That said, you and your husband agree on more important issues, like helping your sister.

In a sea of letters about misdeeds and financial malfeasance, your letter restores my belief that people are essentially good.

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-Quentin Fottrell

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September 01, 2025 19:30 ET (23:30 GMT)

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