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Lev
Lev, Tax Advisor
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I want to buy a car for my girlfriend. If the amount is ...

Customer Question

I want to buy a car for my girlfriend. If the amount is below $12,000.00 will I be liable for any gift tax?
Submitted: 6 years ago.
Category: Tax
Expert:  Lev replied 6 years ago.

The gift is not taxable income for a recipient. You do not need to include it into your income. There is no any limitation for the value of the gift. Please see for reference IRS publication 525 page 30 - http://www.irs.gov/pub/irs-pdf/p525.pdf

The donor - if he/she is an US person - would be required to file gift tax return if the gift is more than $12,000 per person per year (for 2007). There will not be any gift taxes unless lifetime limit of $1,000,000 is reached. In your situation the donor would have to pay gift taxes. There is an unlimited gift tax exclusion available to pay someone's medical or educational expenses.

You may see more information on the gift tax form and instructions:

Lev, Tax Advisor
Category: Tax
Satisfied Customers: 23194
Experience: Taxes, Immigration, Labor Relations
Lev and 3 other Tax Specialists are ready to help you
Customer: replied 6 years ago.
Reply to LEV's Post: LEV,
Thank you for replying so quickly. However, I am confused by your answer. It seems contradictory - specifically the statement "In your situation the donor would have to pay gift taxes." Does that mean on an amount above $12,000.00 or on any amount regardless since this woman is not related by either blood or marriage?
Regards,
Tom Higgins
Expert:  Lev replied 6 years ago.

Sorry for confusion. Let's use an example for clarification. If you pay someone's expenses - that would be a gift to that person. It doesn't matter if you related to the person or not unless you are married - gift between spouses are not taxable gifts if both are US persons.

As your gift amount would be above $12,000 (for 2008) - you are required to file a gift tax return and all amount above $12,000 - is taxable gift. If the car cost is $$18,000, your taxable gift is $18,000-$12,000=$6,000.

Each person may exclude from gift taxes during lifetime $1,000,000. If you never made taxable gifts - you may exclude these $6,000, and your lifetime limit after that will be $1,000,000 - $6,000 = $994,000;

If you during your lifetime already made taxable gifts total above $1,000,000 - you would need to pay taxes on that $6000 (from the example above).

Lev, Tax Advisor
Category: Tax
Satisfied Customers: 23194
Experience: Taxes, Immigration, Labor Relations
Lev and 3 other Tax Specialists are ready to help you
Expert:  Lev replied 6 years ago.
I would suggest to ask for clarification if needed.
Expert:  Lev replied 6 years ago.

You do not need to accept twice unless that was you intend.

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