[Oneday]

Hi, I’m confused about the difference between these.

So, lets say if the annual exclusion for this year’s annual gift exemption is $14,000 and annual gift exemption is 5,340,000.

If I gave my son $16,000 this year, I will only pay tax on $2,000 (16,000 – 14,000) this year correct?

But from my reading (I use Roger, but I looked in another source in the internet due to confusion) it looks like I have to deduct entire $16,000 from the lifetime exempt of $5,340,000, leaving me $5,324,000 exempt.

Here’s where things get confusing… what’s the point of the lifetime “exemption” if I’m already taxed on the $2,000 difference? Will I have to pay the tax when I file 709 each year? I think I read somewhere even if I file 709, not everything’s going to be taxed. If that is the case, then will the Lifetime exemption kick in by the time when I need to pay for the gift tax and deduct that $2,000?

I’m confusing myself even more as I write lol. Please help me understand this.