07/01/2026
IRS Revenue Procedure 2026-25 addressed the IRS's concerns that they might get millions of Gift Tax Returns filed (without tax revenue coming in with those returns). Since the beneficiary of those accounts can't get the money out until the year in which they turn 18, it is a gift of a future interest, which would not normally be eligible for the $19,000 annual gift limit (2026), therefore requiring the filing of a gift tax return. BUT, no gift tax is actually DUE until you give away more than $15 million. That's during lifetime AND at death, so annual gifts over $19,000 would whittle away that $15 million.
(Luckily, I am not in danger of ultimately giving more than $15 million away during my lifetime OR at my death!π)
Here's what I found interesting . . . this is entirely to keep the IRS workload down, because if you do NOT fall under the $19,000 for all gifts, you must report ALL the gifts, and the Trump account contributions must be reported as a gift of a future interest for ALL recipients, which would therefore reduce the $15 million give-away limit. So, if you make the IRS work, you have to reduce it, but if the IRS doesn't have to look at anything, there's no reduction to the $15 million under this new Rev. Proc.!
Remember that this $15 million was in danger of being reduced to a few million under prior proposals. When I began working in tax, the limit was only $650,000 before incurring Estate/Gift Tax. But then, that WAS a long time ago . . . when $650,000 was A LOT of money!! π€