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Lev
Lev, Tax Advisor
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Gift Tax Credit - Is There A Million Dollar Life Time Limit

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My aunt has about $70,000 that was turned over to her because she was added as a full joint owner on my parents account just before they both passed. She states that she wants to open an account in her name with the money and add me just to write checks because if she gives it to me she and I will be talked real big so she don't want to just hand over the money. I have also been told there is a life time limit of a million before anything is taxed on the gift tax for Oklahoma. Would there be a tax and if so what would be percentage be? Any advice is helpful. Thanks.

Hi,

adding the person a joint account holder - doesn't constitute the gift.

The gift - is a voluntary transfer of property from one person or entity to another made without charge or considerations.

The gift would take a place if you actually took a possession of the money - means when the money becomes yours.

 

If your aunt want to gift you $70,000 - there is no any limitation - that are her money and she is free to use them as she want. It is also up to you to accept the gift or not.

It doesn't matter if your aunt give you the money or pay your bills directly.

 

Gift is an income, but not taxable income. Please see IRS publication 525 page 33 for reference - http://www.irs.gov/pub/irs-pdf/p525.pdf

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So - you do not need to claim it on your tax return and do not owe any taxes.

 

Your aunt - as a donor - may need to file a gift tax return if the gift amount is above $13,000 per person per year (for 2009) , but there would not be any gift tax unless the lifetime limit of $1,000,000 is reached.

The gift in form of payment directly to educational or medical facility - is not included into $13,000 limit.

 

Let me know if you need any help with reporting.

 

Lev and other Tax Specialists are ready to help you

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