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jgordosea
jgordosea, Enrolled Agent
Category: Tax
Satisfied Customers: 3032
Experience:  I've prepared all types of taxes since 1987.
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How much money can I gift to my daughter without a tax consequence Can

Customer Question

How much money can I gift to my daughter without a tax consequence?
Can I open a savings, money market, etc account with a 6 figure deposit and add her to
the account from the outset and use her ss# XXXXX the primary ss #? I understand that if it's her ss# XXXXX receive the 1099.

Thanks so much.

Gary
Submitted: 5 years ago.
Category: Tax
Expert:  jgordosea replied 5 years ago.
Greetings,

You are correct that when she gets the gift any income will be hers to report and pay tax.

For the donor, after one million dollars has been gifted above the annual exclusion amount then gift tax is due. For lifetime gifts that are less than one million dollars there is not any gift tax in the year the gift is made; but the amount of lifetime gifts does reduce the amount of the person's estate not subject to estate tax.

If you give more than the annual exclusion amount of gifts for the year to one person you must file a gift tax return; but there is no tax due until the lifetime gifts are more than one million dollars.

For more details see http://www.irs.gov/businesses/small/article/0,,id=108139,00.html

The annual exclusion applies to gifts to each donee. In other words, if you give each of your children $13,000 on or after January 1, 2009, the annual exclusion applies to each gift.

What if my spouse and I want to give away property that we own together?
You are each entitled to the annual exclusion amount on the gift. Together, you can give $26,000 (effective on or after January 1, 2009).

What can be excluded from gifts?
The general rule is that any gift is a taxable gift. However, there are many exceptions to this rule. Generally, the following gifts are not taxable gifts:
Gifts that are not more than the annual exclusion for the calendar year.
Tuition or medical expenses you pay for someone (the educational and medical exclusions).
Gifts to your spouse.
Gifts to a political organization for its use.

So you can give any amount from the list above plus 13,000 from you (and 13,000 from your spouse) before you have to file a gift tax return for the year and without any tax consequence.

You should not only add her name to the account but document the gift in writing and the fact that she actually does have the rights and benefits of ownership. That is, it must be a completed gift for her to be the owner of the income on the account.

I have assumed for this answer that your daughter in not your dependent and that she is not a minor. Please ask if this is not the case.

I hope this helps to know how much and what type of gift you can give with no tax consequence.   

Best wishes.



jgordosea, Enrolled Agent
Category: Tax
Satisfied Customers: 3032
Experience: I've prepared all types of taxes since 1987.
jgordosea and 5 other Tax Specialists are ready to help you
Expert:  jgordosea replied 5 years ago.
<p>Hello again,</p><p> </p><p>In your feedback you wrote: "So, generally speaking, I can gift my daughter $200,000 tomorrow and as long as I don't exceed $1,000,000..no taxes?" </p><p> </p><p>Yes, there is no gift tax due until the one milllion dollar amount of lifetime gifts more than the annual exclusion. If the property is jointly owned with your spouse you should consider each gifting one half of the total amount and filing two gift tax returns to lessen any possible later impact on each person. </p><p> </p><p>See <a href="http://www.irs.gov/businesses/small/article/0,,id=164875,00.html">http://www.irs.gov/businesses/small/article/0,,id=164875,00.html</a> for information on filing the gift tax return, Form 709, which is a separate return from your Form 1040. </p><p> </p><p>The 2008 Form 709 is available at <a href="http://www.irs.gov/pub/irs-pdf/f709.pdf">www.irs.gov/pub/irs-pdf/f<strong>709</strong>.pdf</a> </p><p> </p><p>I hope this helps clarify the filing required and that no amount is due with this return. </p><p> </p><p>Thank you for the opportunity to be of assistance. </p><p> </p><p> </p>

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