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Lane
Lane, JD, CFP, MBA, CRPS
Category: Finance
Satisfied Customers: 4065
Experience:  Providing Financial, Tax & Business advice since 1986
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Hello, For many years, the IRS allowed you to receive a gift

Resolved Question:

Hello,
For many years, the IRS allowed you to receive a gift of up to 10,000 usd without claiming it as income. Is that still the amount limit, and how many days does someone have to wait before receiving another such gift amount and not be taxable, according to IRS rules?

John
Submitted: 1 year ago.
Category: Finance
Expert:  Lane replied 1 year ago.

Lane :

Hi John ... for 2013 the number is $14,000 (It's called the annual exclusion amount)

Lane :

Further, the gift isn't taxed (gift transfer taxes) to the recipient, but rather the giver of the gift is taxed

Lane :

And finally, the lifetime exclusion on gifts is $5, 250,000 .. so even if the giver needed to file the gift tax form (IRS form 709), there would be no tax until the giver has gifted (or transferred at death) a total of $5,250,00 (for 2013 ... the exclusion amount is scheduled to go up each year) ... the 709 from is just an informational return, used to track the lifetime gifts, so that they can be netted against the estate tax exclusion at death,

Lane :

And on the days of wait.... the exclusion amount is based on the giver's tax year (*for most individuals, that's the calendar year)

Lane :

Hope this helps

Lane :

Lane

Lane :

... let me know if you have any questions at all

Lane :

Lane

Expert:  Lane replied 1 year ago.
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Customer: replied 1 year ago.

Thanks, Lane. So then I understand the total amount the recipient can receive from another individual or party as a gift is 14 thousand annually. Since it is taxable on the giver, that raises the question; can the recipient receive a gift from two different parties of up to 14 thousand each, or does the 14k limit apply also to the recipient's annual total gifts from all parties?

Expert:  Lane replied 1 year ago.

Very good question.

A person can giver 14,000 per person.

They way it's expressed is... 14,000 per person, per donee.

SO, if Both of your parents wanted to give you a gift, you can receive $14,000 from each, (28,000) per year without any tax or reporting requirement on their part.

I have one client who gives each of her 5 grandchildren 14,000 every year (a total of $70,000) and she does not have to file a gift tax return or reduce her lifetime exclusion at all.


Customer: replied 1 year ago.

Interesting. So, if two family members, for example, give me a gift of not more than 14 k each for a given fiscal year, I would not be required to claim it on my tax return for that year?

Expert:  Lane replied 1 year ago.


Yes, actually you would not be required to report or pay any tax, no matter what the amount.

In our system. the gift (or estate) tax is paid by the giver (or the decedent's estate, respectively).

It is the GIVER of the gift .. or the estate of the deceased person, that must pay this transfer tax.


Here's the tax code citation:

(a) General rule.--Gross income does not include the value of property acquired by gift, bequest, devise, or inheritance.

26 U.S.C.A. § 102 (West)


Hope this helps

Lane

Lane, JD, CFP, MBA, CRPS
Category: Finance
Satisfied Customers: 4065
Experience: Providing Financial, Tax & Business advice since 1986
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