If you could wait until the first of 2012 to gift him the other $7K, then you would not have to pay gift tax. A couple can also give an additional gift of up to $15,000 to each son-in-law or daughter-in-law. In other words, if you give each of your children $11,000 in 2002-2005, $12,000 in 2006-2008, $13,000 in 2009-2012 and $14,000 on or after January 1, 2013, the annual exclusion applies to each gift. Also, if your son is married, you could him $13K and give his wife $13K and not have to pay gift tax. So when you *do* die, your heir can inherit a maxmimum of $5,100,000 since they already have $100K that you gifted to them prior to your death. The IRS will charge all taxable gifts over the $5 million lifetime limit at the gift … If you give more than $14,000 to one individual, you are required to file a gift tax form. So, originally the money was lent to my aunt where it's used for her business (in australia). If you don’t, the IRS can say the interest you should have charged was a gift. OR, if you’re married, you and your wife could both gift him $13K without being taxed. Giving money to children – even adult children – carries a personal benefit as well as a tax benefit for parents. If your estate will be above the exemption, you may wish to lend the money and gift the maximum annual amount; as others noted, this could repay the loan in four years. – Gifts of $15,601 or more from foreign corporations or foreign partnerships (including from people related to these corporations or partnerships). The annual exclusion applies to gifts to each donee. My mum is selling her house and wants to gift me £100,000 as an early inheritance. The answer will depend upon whether your estate is likely to exceed the exemption. Also, can I just open a saving account and pay this large amount in? There is a flat £3,000 limit each year for gifts, which can be carried over to the following year if you don’t use it, meaning up to £6,000. (The yearly gift limit is $14,000 per individual, so each of your parents could gift you $14,000 for a total of $28,000) If gifts are kept under the limit, then there is no need to file a gift tax return. So, while you would have to file a gift tax return, you would only be responsible for taxes on $15,000 of the $30,000—or you can apply it to your lifetime gift exclusion (more on that in a minute). Many thanks Over your lifetime, you are allowed to exclude up to $5 million worth of taxable gifts from your taxes meaning you can make up to $5 million worth of taxable gifts throughout your life without owing any taxes. Your parents will NOT pay gift tax unless they have already used up their lifetime exemption (which is unlikely - … If it is not, you can gift the entire $100,00 and use a portion of your credit. 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