What is the requirement for a gift to be excluded from tax?

The requirement for a gift to be excluded from tax hinges on the annual exclusion limit set by the IRS. For the year 2023, this limit has been established at $17,000 per recipient. This means that individuals can give gifts up to this amount to as many recipients as they desire without incurring any gift tax or having to file a gift tax return.

Gifts that fall under this limit are considered to be non-taxable for the giver, thus allowing for a strategy of wealth transfer without tax implications. It's important to stay updated with these limits, as they can change annually based on inflation adjustments or legislative decisions.

In the context of the other options provided, limits of $15,000, $20,000, and $10,000 do not reflect the current exclusion amount for 2023 and are, therefore, misleading in this scenario. The correct limit accurately reflects the IRS guidelines and ensures compliance with tax regulations regarding gifts.