How the Child Gift & Savings Plan Calculator Works
Korea allows tax-free gifts to children only in 10-year lump sums — $2,000 for minors, larger for adult children — that reset once per decade. The U.S. gift tax exclusion works differently and, for most families, more generously: you can gift up to $18,000 per person per year (2024) completely tax-free, every single year, with no lifetime cap on how many years you do it. A married couple can combine their exclusions through "gift-splitting" to give $36,000 per year to one child without touching any lifetime exemption.
This calculator estimates how a gift placed into a custodial account — typically a UTMA (Uniform Transfers to Minors Act) or UGMA (Uniform Gifts to Minors Act) account — could grow over time if invested. Enter this year's gift amount, whether you and a spouse are combining exclusions, an expected annual return, and how many years until the child needs the money (often 18, for college). The calculator compounds the gift annually to project its future value.
If a single gift exceeds the annual exclusion, you don't owe tax right away — the excess simply counts against your lifetime gift and estate tax exemption, which was over $13 million per person in 2024. Practically, that means almost no one actually pays gift tax; they just file IRS Form 709 to track the excess against that lifetime limit. One thing to keep in mind with custodial accounts: the money legally belongs to the child once gifted, and control transfers to them at the age of majority in their state (usually 18 or 21) — plan withdrawals accordingly.
Frequently Asked Questions
In 2024, you can gift up to $18,000 per year to any one person, including your child, without filing a gift tax return. Married couples can combine exclusions through gift-splitting to give up to $36,000 per year tax-free. Unlike Korea's 10-year lump-sum limit, the U.S. exclusion resets every calendar year.
You don't owe gift tax immediately. The excess just counts against your lifetime gift and estate tax exemption (over $13 million per person in 2024), so most families never pay actual gift tax — they simply need to file IRS Form 709 to report the excess.