Gifting money to family members can help show you care, and it’s especially convenient if they live far away. Maybe you’re not sure what a sibling may like for their birthday, or perhaps a close relative could use help paying for medical expenses.
Whatever your reason, there are some important factors to consider before sending money to family. Potential tax implications top the list from a legal perspective, especially if you’re sending a large amount. Etiquette and family dynamics are also important factors to consider.
In this spirit, let’s look at nine rules on gifting money to family members in 2025. These tips will help you send cash safely without delays or confusion.
Key takeaways
- There are clear rules on gifting money to family, including annual and lifetime IRS exclusions that help you avoid paying taxes on the gift.
- Your recipient’s financial situation and the purpose of your gift both play big roles in how and when to give money.
- Exchange rates can affect how much money actually reaches family members overseas.
- Legal considerations, like gift letters for home down payments and anti-money laundering checks, can come into play when giving large amounts.
- Sometimes, non-cash help or setting boundaries can be just as valuable as gifting money to family. And it may reduce strain on relationships.
1. Understand the recipient’s financial situation
Before giving a monetary gift to a family member, pause to consider their financial reality. While they may benefit from a cash gift, some situations may call for different types of support.
If they’re dealing with a mountain of medical bills or struggling with everyday expenses, even a modest cash gift could give them a little breathing room. Covering a few mortgage payments, for example, could give them space to focus on their family or other responsibilities.
Gifting money to a family member can also be meaningful if they’re saving for something big—say, a home or a new business. Your support could help speed things up or offer an extra cushion.
Of course, a direct cash gift might not work for everyone. Some people don’t use bank accounts or prefer to manage money another way. In those cases, consider sending funds through a service that supports cash pickup or mobile wallets. What matters most is that your gift reaches them in a way that’s actually useful.
2. Identify the purpose of the gift
Before you send money, think about why you’re giving it and what you hope it helps with. A clear purpose for gifting money to family makes the gesture more meaningful and avoids misunderstandings later.
For example, you might be gifting money for a graduation to help cover school expenses or to set up your child or grandchild for their next adventure. Or you may be giving money as a wedding gift to help with a honeymoon or furnish a new home.
If you want to make your gift feel extra special, consider creative ways to give cash that match the occasion. A “cash cake” for a birthday, a money-filled piñata at a graduation party, or a playful umbrella that “rains” bills can turn a simple gift into something unforgettable.
Finally, having an open conversation with the recipients about how you hope they use the money can help everyone feel comfortable and make sure the money goes further (in the right direction).
3. Determine the amount
One of the most important rules on gifting money to family is deciding how much to give. It all comes down to the occasion and your budget. Always start by taking stock of your own finances so you don’t stretch yourself too thin.
If you’re not sure what’s typical, these general guidelines can help:
Occasion Typical gift range
Birthday $20 – $100
Graduation $20 – $100
Wedding $50 – $200+
New baby $25 – $100
Holidays $20 – $50 per person
Keep in mind that these are just suggestions. Let your relationship with the family member(s) guide your final decision. A close family member often justifies a bigger gift than a distant relative.
Sending money overseas? See real-time exchange rates with Western Union so you know exactly how far your gift will go.
4. Know the annual tax exclusion amount
In certain countries, like the US, you can typically give monetary gifts to family without paying taxes, as long as it’s under a certain amount.
IRS rules on gifting money to family in 2025, for example, stipulate that you can gift up to $19,000—or $38,000 as a married couple—to any one person over the course of the year without needing to report the gift to the IRS. This is called the gift tax exclusion, and the amount is subject to change every year.
If you give more than that amount to any one person in a single year, you’ll generally need to file a gift tax return for that year. Keep in mind, however, that the responsibility for reporting and paying any gift tax falls on you as the gift giver, not the person receiving the money.
Also, going over the gift tax exclusion limit doesn’t automatically mean you’ll owe taxes. It just means the excess counts toward your lifetime exemption, which is covered in the next section.
Of course, this is just the US rule. When gifting money, even to family members, check the tax rules where you (and potentially your recipient) live. Since tax laws can be complicated and are always changing, consider consulting a financial professional to better understand the tax implications of your gift.
5. Take advantage of the lifetime gift tax exemption
In addition to the annual limit, the IRS allows you to give larger monetary gifts to family over your lifetime without paying taxes, but only up to a certain amount. This is called the lifetime gift exemption. In 2025, this amount is approximately $13.99 million per person.
How does this exemption work? If you give more than the annual exclusion ($19,000 in 2025) to one person in a year, the excess amount counts toward your lifetime limit. So, if you gift your daughter $50,000 for a home down payment in 2025, $31,000 of that would apply to your lifetime exemption.
If you exceed your lifetime exemption, any additional gifts are taxed at between 18% and 40%, depending on how far over the limit you go. So, tracking how much cash you gift over time is important.
And as always, talk with a tax professional to better understand how the gift tax may impact you and your plans.
6. Understand the legal considerations
Taxes aren’t the only thing to think about when gifting money to family members, especially with larger amounts. In some cases, you may need to provide official documentation to prove the money is a gift and not a loan.
For example, in both the UK and the US, you can gift money to help family members buy a home. While there’s no legal limit on how much you can give for this purpose, lenders may require a formal gift letter, proof of funds, and a copy of your ID to confirm the money doesn’t have to be repaid.
Also, keep in mind that large transfers of money can sometimes trigger anti-money laundering checks from banks or money transfer services, so you may be asked to verify the source of the funds. Large gifts can also affect the giver’s or recipient’s eligibility for certain government benefits, like Medicaid for long-term care.
So, before doing anything, always check the legal requirements in your country or state. If you’re unsure how local law might affect your gift, talk with a trusted attorney for advice.
7. Analyze the impact on your relationships
Money can be both a source of happiness and the cause of tension. Gifting money to family can feel especially rewarding, knowing you’re helping reach a goal or get through a tough time. But it can also create expectations in ways you might not intend.
For example, if you give money regularly, family members may come to rely on it and feel frustrated if it stops. And others might feel left out or resentful if they didn’t receive the same financial support.
It’s ultimately your choice who you support, and when. But it’s worth thinking ahead about how your gift might affect family relationships. If there’s any chance of tension, a quick, honest conversation can go a long way.
8. Set personal boundaries
Part of managing expectations when gifting money to family is to set clear boundaries around how much you’ll give and for how long. If you plan to send money online to a family member regularly—like to help cover living expenses after a sudden job loss—be clear about what you can realistically provide.
If, for example, you agree to pay rent for the next four months while they look for work, it’s appropriate to ask them to let you know if they get a job sooner so you can adjust.
Before deciding what you can afford, it can help to make a budget and review your financial goals.
Setting clear and reasonable limits can help protect your financial well-being and your relationship with your family.
9. Consider alternatives to gifting money
At the end of the day, it’s up to you how you want to approach the etiquette and rules of gifting money to family. Sure, you should adhere to tax and legal requirements, but you also need to consider your personal limits and boundaries.
Sometimes, giving a large amount of money isn’t an appropriate solution, such as when you can’t afford to do so. In these instances, you can find other ways to support your family member instead.
For example, if all you can afford to do is to help pay for diapers for your niece’s newborn son, that’s fine. Or, if you’re concerned that your son can’t find a reliable car to commute to and from work, consider helping him cover his auto loan payments.
Other ways you can give both personal and meaningful gifts to loved ones without sending cash include:
- Donating to a cause, school, or charity that’s important to them
- Giving grocery store or food delivery gift cards
- Providing gas cards or transit passes to help with commuting costs
- Paying a specific bill (e.g., utilities or medical expenses) directly
- Offering to cover the costs of a child’s extracurricular activities or school supplies
- Contributing to a savings account or educational fund
- Sharing your time or skills, like helping with home repairs, babysitting, or tutoring
- Gifting memberships or subscriptions they will use and enjoy
- Giving thoughtful homemade gifts or family heirlooms that carry sentimental value
Send money to family and friends with Western Union
Whether you’re gifting money to friends or family across town or across the globe, Western Union has you covered. Download the Western Union® app today, send money online, or visit an agent location near you to get started. We even have options for sending money to someone without a bank account.
Before you send, take a moment to think through the recipient’s situation and understand any tax and legal considerations. When done thoughtfully, a cash gift can offer real support and peace of mind (on both sides).
FAQs
You can gift a family member up to $19,000 per person in 2025 in the US without risking paying taxes on the amount. This is called a gift tax exclusion. Though you can technically give more in 2025 if you haven’t exceeded your lifetime gift tax exclusion, you will have to fill out a separate tax form indicating the amount.
You can gift money to family members tax-free by staying under the gift tax exclusion amount in your jurisdiction (in the US, the annual limit is $19,000 per person) or directly paying for goods and expenses. For example, if you want to help pay for a couple’s honeymoon, you can book the hotel for them.
The amount you’re allowed to give to a family member will depend on factors such as how much you can afford, what the gift is for, and the legal rules in your jurisdiction. Technically, you can gift any amount, though consider if it’ll impede your finances and whether you or the recipient must pay taxes on the gifted funds.
The IRS generally doesn’t know you’ve given a gift unless you’re required to report it. If you give more than the annual exclusion amount ($19,000 in 2025) to any one person, you must file Form 709, the United States Gift Tax Return, to disclose the amount over the limit that you gifted. Banks and financial institutions don’t automatically report gifts, but large transfers can trigger other reporting rules. Always keep accurate records of any gifts you give so you can stay within tax laws and avoid surprises later.
The best way to gift money to family members depends on their needs and your level of comfort. Some people prefer direct bank transfers, while others may need a cash pickup or prepaid card if they don’t have a bank account. You can also make it special by using a check with a thoughtful note or choosing creative ways to give cash for birthdays, weddings, or graduations. Whatever the method, be clear about the purpose, keep good records, and understand any tax or legal requirements.
