We decided to pay off my daughter and son-in-law’s mortgage once the balance dropped to $76,000. Here’s the reason we settled on that specific amount.

Is a Gift of $76,000 to Your Daughter and Son-in-Law a Tax Issue?

“Am I required to submit Form 709 with my taxes this year for this?” (Photo subject is a model.) - Getty Images/iStockphoto

A Letter to Quentin

Last year, I promised my daughter and her husband that I would pay off their mortgage if they could reduce the balance to below $76,000. Together with my spouse, daughter, and son-in-law, we visited the bank, and my wife wrote a check to cover the remaining amount.

We chose the $76,000 figure because both my husband and I intended to each give $19,000 to both our daughter and her husband. Do I need to file Form 709 for this transaction on my taxes this year? Was this a wise move?

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— The Parent

“My wife wrote the check for the balance.” (Photo subject is a model.) - MarketWatch illustration

Response to the Parent

Your approach might inspire other affluent parents to view $76,000 as a strategic gift amount.

By each giving $19,000 to both your daughter and son-in-law, you and your spouse together provide $76,000, which fits perfectly within the federal annual gift tax exclusion. The IRS considers the donor and recipient relationship, not whether the funds come from a joint or individual account.

To address your concern: You should file IRS Form 709, even if your gifts to each recipient did not exceed $19,000 in the 2025 tax year. The annual exclusion applies as long as the recipients have immediate and full access to the gift. For 2025 and 2026, the annual exclusion remains at $19,000 per recipient.

Having your wife write the check will not create complications with the IRS, provided you complete Form 709. If the IRS initially views the entire mortgage payoff as her gift, and the total exceeds her annual exclusion for both recipients, both of you should file Form 709. However, with your amounts, this is typically unnecessary.

By selecting the gift-splitting option on Form 709, the IRS will treat the gift as being made equally by both you and your wife, regardless of whose check was used. This aligns with your intentions and ensures both your contributions stay within the annual exclusion. The gift-splitting election is a helpful clarification, not an extra burden.

Additional Insights

Alternatively, you could have gifted your daughter and her husband a total of $152,000 by giving $76,000 at the end of one year and another $76,000 at the start of the next. For them, eliminating their mortgage and making that final payment is likely a huge relief, even if your generosity slightly overshadows their sense of accomplishment.

There are differing opinions about making such large gifts. Some argue that removing financial hurdles for your children may reduce their motivation or sense of achievement. Others believe you’re providing them with the freedom to save for retirement sooner and enjoy life without the stress of debt.

Ultimately, the most important issue is the one you’ve raised regarding IRS requirements. It’s your money, and you have every right to use it in a way that benefits your family and brings you happiness. (With the lifetime estate tax threshold at $15 million for 2026, it’s assumed you’re well below that limit.)

Was this a smart move? Absolutely—especially for your daughter and her husband. Just remember, if their marriage were to end, the gift cannot be reclaimed unless your son-in-law agrees. As long as you and your wife have secured your own retirement, continue to enjoy your life and share your good fortune with those closest to you.

Mortgage payments are among the most significant financial burdens people face.

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