Gift Splitting: Definition, How It Works, and Key Rules

Key takeaways
* Gift splitting lets a married couple treat a gift as made half by each spouse, effectively doubling the annual gift tax exclusion available to a couple.
* For 2024 the annual exclusion is $18,000 per person (so $36,000 for a married couple using gift splitting). The lifetime gift/estate exemption is $13.61 million per person for 2024.
* To use gift splitting, both spouses must agree and the election is reported on Form 709. The donor (or donors) is responsible for filing and paying any gift tax.

What is gift splitting?
Gift splitting is an estate-planning mechanism that allows married couples to combine their individual annual gift tax exclusions so a single gift is treated as half-made by each spouse. This increases the amount a couple can give to any one recipient in a year without using up lifetime exemption or incurring gift tax.

How it works
* Each individual has an annual gift tax exclusion (2024: $18,000). When spouses elect to split a gift, the IRS treats half the gift as coming from one spouse and half from the other.
* A couple can therefore give up to $36,000 to any number of recipients in 2024 without gift tax consequences.
* If a gift to one recipient exceeds the combined annual exclusion, the excess reduces the giver’s lifetime exemption (currently $13.61 million per person in 2024) unless gift tax is paid.
* To elect gift splitting, spouses must agree and report the split on IRS Form 709 (United States Gift (and Generation-Skipping Transfer) Tax Return). Both spouses must sign the form when required.
* The gift giver—not the recipient—is generally responsible for filing Form 709 and for any gift tax owed. Recipients do not include gifts in taxable income.

Special considerations
* Gifts to a spouse and certain political organizations are generally not treated as taxable gifts. Direct payments made to medical providers or educational institutions for someone else’s expenses are also excluded from the gift tax rules (the payments must be made directly to the provider).
* If a couple divorces before electing to split gifts for that tax year, they cannot split gifts for that year. The gift must not benefit the spouse making the election.
* A joint bank check or two separate checks (one from each spouse) can both be treated as a split gift, provided the election and reporting rules are followed.
* Because tax rules change and gift transactions may have complex consequences, consult a tax professional before making large gifts.

Example
Robert and Mallory want to give $30,000 to their child to pay for a home renovation. If they elect gift splitting, each spouse is treated as giving $15,000—each below the 2024 individual annual exclusion—so no gift tax is due. They still must file Form 709 to elect the split.

Common questions
Q: When must Form 709 be filed?
A: File Form 709 when you elect to split gifts with your spouse or when your gifts to any one person exceed the annual exclusion for the year.

Q: Are gifts taxable to the recipient?
A: No. Recipients do not generally report gifts as taxable income.

Q: Do tuition and medical payments count as gifts?
A: Direct payments to educational or medical institutions on someone else’s behalf are excluded from gift taxation and do not use the annual exclusion.

Bottom line
Gift splitting is a simple way for married couples to double their annual gift exclusion and transfer more value tax-free. Use Form 709 to elect the split and consult a tax advisor for large or complex gifts.