Is there a legitimate procedure to gift adult children money?

Is there a legitimate procedure to gift adult children money? You deduct the amount of the gift and the adult claims the income?

As a mentor of ours used to say, "When you get a gift, what do you say? Thank you." That's it. How does this apply? Well, to your second question, the recipient of a gift never has income. At the same time, giving a gift doesn't give you a deduction.

Here are a few pointers. You are currently allowed to give a gift to someone of $12,000 without incurring the gift tax. This means that dad can give $12,000 to son and daughter-in-law, and daughter and son-in-law — a total of $44,000 in gifts, tax free.

The above is one of the best ways to give money to your kids, get it out of your estate, and avoid the gift tax.

If you give a gift over the $12,000 limit, you need to fill out form 709 to calculate how much you owe in gift taxes.