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Lane
Lane , JD, CFP, MBA, CRPS
Category: Finance
Satisfied Customers: 9203
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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My uncle wants to pay for my 4 year old twins pre-school education

Resolved Question:

My uncle wants to pay for my 4 year old twins pre-school education for the year Sept. 2013 through June 2014.

The cost is about $8,000 each or $16,000 total and will be used solely for their education. He is gifting the money to them.

My question is do I have to pay taxes on the money...and if so, is it considered as income?
Submitted: 2 years ago.
Category: Finance
Expert:  Lane replied 2 years ago.

Lane :

Hi,

Lane :

No, the only taxes that COULD be charged would be Gift taxes (a transfer tax - gifts are excluded from income for tax purposes)

Lane :

Also, an person can give up to 14,000 per year (to as many people as he/she would like) with having to either file a gift tax for OR pay any gift taxes

Lane :

sorry for the typo. "... a gift tax FORM.."

Lane :

No tax is ever due to the reciever of the gift... and again he is below the annual gift exclusion of $14,000

Customer:

My concern is to the person receiving the money not the person giving the money.

Lane :

I understand, but you are fine .. again, the gift tax is borne by the Giver (called the giftor) NOT the receiver (called the giftee)

Lane :

Here's the tax law citation on this:


(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)

Customer:

OK great! We don't have to pay then as the reciever.

Lane :

nope

Customer:

Thank you this answers the question.

Lane :

never... and the gift tax LIFETIME exclusion is $5,250,000 - the only need to report (again for the giver) is to track against that lifetime exclusion ... but if the gift is under $14,000 per year (per person) then there's not even a reporting requirement

Lane :

You're welcome!

Lane and other Finance Specialists are ready to help you
Expert:  Lane replied 2 years ago.

Thanks so much for the rating and bonus!

Let me know if I can help further.

Lane