Gift tax annual exclusion
By Jude Wallis
The annual gift-tax exclusion is a per-recipient cap on present-interest gifts. Gifts at or under the cap generally do not use the lifetime exemption. Gifts above it create an excess that must be accounted for.
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Room remaining is the cap minus the gift, floored at zero. Excess is the gift minus the cap, floored at zero. The cap resets each year and is per recipient. The lifetime exemption is a different running total.
The figure used on the calculator is a teaching input, not a claim about the current statute.
How the gift tax annual exclusion works is the explainer. The gift tax calculator splits one gift against one cap.