"For your oldest daughter: There's no tax difference between handing her $100,000 or paying contractors directly-both are gifts to her. She won't owe taxes either way, since gifts aren't taxable income to recipients. On the other hand, you'll need to file IRS Form 709 to report gifts over $19,000 (which is the annual exclusion amount for 2025) or $38,000, if you and a spouse are giving her a gift together."
"The practical difference? Paying contractors directly gives you control and ensures the money goes toward the house. Handing her cash respects her autonomy as an adult. Start with a conversation and talk through the options. Let her tell you how she prefers to handle contractors and the cash."
There is no tax difference between giving a beneficiary cash and paying contractors directly for that beneficiary's benefit. Recipients do not owe income tax on gifts. Gifts above the annual exclusion ($19,000 for 2025, or $38,000 for joint spousal gifts) must be reported on IRS Form 709. Gift tax liability arises only if the giver has already exhausted the lifetime exemption (stated as $13.99 million). Paying contractors directly provides control to ensure funds are used for the intended home repairs, while giving cash respects the recipient's autonomy. Begin with a candid conversation to determine which approach best fits the recipient's preferences and needs.
Read at Slate Magazine
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