Outline:
Dear Quentin,
Last year, I informed my daughter and her spouse that I would settle their mortgage if it was below $76,000. My husband, daughter, son-in-law, and I all visited the bank. My wife wrote the check for the remaining amount.
Here’s the reasoning behind our choice of $76,000: My spouse and I intend to each contribute $19,000 to both our daughter and her husband. Do I have to complete Form 709 for this on my taxes this year? Was this a wise decision?
The Parent
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Dear Parent,
You could initiate a trend among affluent parents, with $76,000 becoming the key figure.
If you and your spouse each give $19,000 to your daughter and son-in-law individually, totaling $76,000, you remain within the federal annual gift tax exclusion. Whether the funds come from a joint or individual account is irrelevant; the IRS considers these gifts based on the donor to the recipient.
To address your question: Submit IRS Form 709 even if the total value of your gifts to your daughter and her spouse was $19,000 or less in the 2025 calendar year; the exemption is valid provided the recipients have immediate and unrestricted access to use, own, or benefit from the gift. This figure represents the annual gift tax exclusion for both 2025 and 2026.
The gift-splitting choice on Form 709 presents an opportunity for you to explain this gift, rather than a challenge.
Your spouse writing the check won’t lead to confusion with the IRS, provided you complete your Form 709. Since your spouse wrote the check, the IRS may initially consider the entire mortgage payment as a gift from her. If this amount surpasses her annual exclusion when combined for both recipients, both of you should complete a Form 709. Normally, this isn’t required due to the amount involved.
By choosing gift splitting on Form 709, your gift is considered to have been split equally between you and your spouse, even if only one of you wrote the check. This aligns with your initial intention, ensuring that both your portion and your wife’s portion remain within the annual gift tax exclusion. The gift-splitting option on Form 709 offers you a chance to make this gift clearer, rather than being a hassle.
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You might have also provided your daughter and her spouse with $152,000 (by giving $76,000 on December 31 and another $76,000 on January 1). For them, there’s likely no greater joy than settling their mortgage and finalizing that last payment — even if the happiness is somewhat lessened by your kindness.
There are valid points on both sides regarding these gifts, with some critics arguing that removing such obstacles from your children’s lives by simply going to the bank diminishes the value of hard work and the sense of accomplishment. On the other hand, others might claim that this action allows them to start saving for retirement sooner and leads to a more stress-free life.
Keep in mind, if your daughter’s marriage ends, you can’t retrieve that gift.
The key issue at hand is the one you raise. In this case, it pertains to the IRS. It is also your money, and you deserve the ability to utilize it in a manner that provides the greatest benefit for your family, which naturally brings you satisfaction as well. (The lifetime estate tax exemption is $15 million for 2026, so I’m assuming you are significantly under that amount.)
Was it a wise decision? Absolutely, it was an excellent choice, particularly for your daughter and her spouse. Keep in mind, if your daughter’s marriage ends, you won’t be able to reclaim that gift (unless your son-in-law agrees to it on his own). Provided you and your wife have sufficient funds saved for retirement, continue enjoying life and sharing it with those you care about most.
Home loans are, in the end, one of the most significant burdens individuals face.
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