What is gift splitting? Under US gift tax rules, married couples have a powerful tool known as gift splitting, which allows them to treat a gift made by one spouse as though it were made half by each spouse. This can effectively double the annual exclusion available for tax-free gifts, but only when both spouses are US citizens.
What Is Gift Splitting?
Gift splitting is an election made by married US citizen spouses that allows them to combine their annual gift tax exclusions.
Instead of the standard $18,000 per recipient (2024), the couple may gift up to $36,000 per recipient in the same calendar year without using any lifetime exemption.
To use gift splitting:
The gift must be to a third party (not to the other spouse); Both spouses must consent to gift splitting; and The election must be made on Form 709, even if no tax is due.
Example
John and Sarah (both US citizens, filing jointly) make a $36,000 cash gift to their daughter in 2024.
Ordinarily, John could only give $18,000 without triggering gift tax.
However, by electing gift splitting, the couple treats the $36,000 as if John gave $18,000 and Sarah gave $18,000.
Result: No gift tax and no reduction of their lifetime exemption.
When Gift Splitting Does Not Apply
Gift splitting only applies if both spouses are US citizens.
If one spouse is a non-US citizen (NRA), gift splitting is not permitted under US law. In that case, any gift made by the US-citizen spouse is limited to the standard $18,000 annual exclusion, and any excess must be reported on Form 709 and reduces the lifetime exemption.
Example
A US citizen married to an NRA spouse makes a $30,000 gift to their child in 2024.
The full $30,000 is treated as a gift from the US-citizen spouse (no gift splitting allowed).
$18,000 is covered by the annual exclusion and $12,000 reduces the lifetime exemption and must be reported on Form 709.
Final Thoughts
Gift splitting is a valuable tax planning tool for married US citizen couples, allowing them to double the annual exclusion when making gifts to third parties. However, it is not available where one spouse is a non-US citizen.
The information in this blog post is for general informational purposes only and does not constitute professional tax advice. We strongly recommend consulting a qualified tax professional before making any decisions. US Expat Tax Advisor is not liable for any actions taken based on this content.
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