Can I Give Money to My Kids to Reduce My Taxes?

You can give up to $18,000 per recipient per year (2024 annual gift tax exclusion) without filing a gift tax return, and gifts are not income to the recipient. However, simply giving money to your children doesn't reduce your current-year income taxes — you've already earned and owe tax on that money. Income shifting works best by employing your child in your business or transferring income-producing assets to them. Be aware of the "kiddie tax" rules: unearned income (interest, dividends, capital gains) above $2,500 for children under 19 (or full-time students under 24) is taxed at the parent's rate. Strategic gifting can reduce estate taxes long-term, even if it doesn't reduce your current income taxes.