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Merlo
Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience:  25+ years tax consulting. Specializing in returns for US citizens living abroad
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My in-laws received a large inheritance. They would like to

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My in-laws received a large inheritance. They would like to gift my husband and me $100,000k. Their experts told them we do not have to claim this on our taxes (New Mexico) or pay any tax on this, since they had already paid out the inheritance tax. My question is, do we have to pay tax? Or would it be better to split the amoutn to $50,000 for this year and $50,000 for 2010? I know the gift tax exemption is $13,000, so they could each gift my husband 13k and me 12 k and that would fall in that exemption amt. for each year
Submitted: 4 years ago.
Category: Tax
Expert:  Merlo replied 4 years ago.
Hello Lg,

First, if and when gift tax is ever due, it is paid by the donor and not by the recipient of the gift. However, under current regulations, each taxpayer is allowed to give gifts in their lifetime of up to $1 million before any gift tax becomes due. This is part of what is called the Uniform Tax Credit Act.

In addition to the $1 million lifetime exemption, each individual is allowed to give annual gifts of up to $13,000 to any number of individuals, and those gifts do not even apply towards the lifetime exemption, nor do they need to be reported. Gifts which exceed the annual exclusion of $13,000 must be reported by the donor by filing Form 709 with the IRS to report the value of the gift. However, no tax is actually due unless that donor has already reached his $1 million lifetime limit. The amount reported then reduces that donor's remaining lifetime balance that he may give in non-taxable gifts.

If this was helpful please press the Accept button. Positive feedback is also greatly appreciated.

Thank you Lg and let me know if you have more questions.

Customer: replied 4 years ago.
so, if we received 13k & 12k from both of them, so 26k for my husband and 12 k for me , are we exceeding the annual exclusion? Would that mean we then have to file the form (or my inlaws have to file the form 709?)
Expert:  Merlo replied 4 years ago.
Hello again Lg,

Your inlaws can actually give you a total of $52,000 without having to file the Form 709 -- each of them can give $13,000 to you and to your husband for a total of $52,000.

Since this is an annual allowance, they could give you a total of $52,000 now in 2009 and then another $52,000 next year in 2010, and they would not be required to file the Form 709 to report these gifts.

If their gifts exceed this amount in any one year, then the Form 709 needs to be filed, and it is filed by the donor of the gift and not by the recipient.

If this was helpful please press the Accept button. Positive feedback is also appreciated.

Thank you Lg

Merlo, Accountant
Category: Tax
Satisfied Customers: 9783
Experience: 25+ years tax consulting. Specializing in returns for US citizens living abroad
Merlo and 3 other Tax Specialists are ready to help you

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