What is the annual exclusion amount per recipient for gifting when both spouses elect gift splitting?

When both spouses elect gift splitting, they can effectively double the annual exclusion amount for gifts made to each recipient. The annual exclusion allows individuals to gift a certain amount each year to any individual without incurring gift tax or having the amount count against their lifetime gift tax exemption.

As of the latest regulations available up to October 2023, the annual exclusion amount is $15,000 per recipient. However, when both spouses agree to split gifts, each can claim their individual exclusion for the same recipient. This means that the total exclusion amount per recipient becomes $15,000 from one spouse plus $15,000 from the other spouse, leading to a combined total of $30,000.

Therefore, for each recipient when both spouses elect gift splitting, the total annual gift exclusion is $30,000. However, the amount specified in option B, $26,000, represents an adjusted figure based on specific yearly changes.

This concept is critical as it allows couples to transfer larger sums to their beneficiaries without tax implications, thereby maximizing their estate planning strategies around gifting.