Smart Strategies for Holiday Gifting and Year-End Planning

12.08.2025

Author:  Attorney Eric S. Johnson

As the holiday season approaches, many people consider making gifts to loved ones—not just as a gesture of generosity, but also as part of year-end financial planning. This article addresses important tax thresholds, preserving gifts to young children, and gifting for education.

The Annual Gift Tax Exclusion

For 2025, the annual gift tax exclusion is $19,000 per recipient. This means you can give up to $19,000 to as many individuals as you like without triggering any gift tax reporting requirements. Married couples can combine their exclusions and give up to $38,000 per recipient by electing to split gifts.

Most people will never approach these limits, but if you do exceed them, you need to file IRS Form 709. Filing does not necessarily mean you owe tax—it simply tracks how much of your lifetime exemption ($13.99 million per person as of 2025) you have used. For those who are required to file form 709, it must be filed by the tax deadline (April 15 of the following year).

Gifts for Young Children

If you are thinking about gifting more than small sums to a person under 18 years old, you may want to consider a Uniform Transfers to Minors Act (“UTMA”) Account.

An UTMA Account allows you to gift a wide range of assets (such as cash, stocks, bonds, mutual funds, and real estate) to a child. The assets are owned by the child upon deposit but are managed by an adult custodian that you select until the child reaches the age of 21. UTMA Accounts are easy to set up and have no contribution limits. Earnings may be taxed at the child’s lower rate, offering potential tax savings. Gifts to an UTMA Account are irrevocable. Assets in an UTMA Account count as the child’s for student financial aid purposes.

Gifts for Educational Purposes

If you want to make a gift that is used for educational purposes, you can gift to a 529 Plan (either one that you create or an account already in existence). In a 529 Plan, money is invested in financial assets (usually mutual funds or EFTS). The money is managed by the account owner (either you or another adult). The earnings grow tax-free, and withdrawals for qualified education expenses are tax-free. Many states offer tax deductions or credits depending on which plan is used. Benefits of 529 plans include high contribution limits and minimal impact on financial aid.

Subject to some exceptions, funds not used for qualified withdrawals incur taxes and penalties. Investment choices are limited to the options allowed by the plan.

Conclusion

Giving generously is part of the holidays. The strategies above can help you optimize your taxes, prevent large gifts from being misused while the beneficiary is growing up, or making a lasting impact through education.

From all of us at Curran Law Office, we wish you a Merry Christmas and a Happy New Year! Thank you for trusting us to serve you and our community.