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MequonCPA, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 2342
Experience:  CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.
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Hypothetically ***Got a one time gift over 10K but under 50k.

Customer Question

Hypothetically ***Got a one time gift over 10K but under 50k. Filed for an extension. Bought a car and don't know how to report it. Am also unemployed and a full time student receiving Pell Grants. So am always broke, but got a nice car in name with gift. Don't want gift to interfere with education. This gift has not been filed by the giftee' either and prob won't!?
Submitted: 5 years ago.
Category: Tax
Expert:  MequonCPA replied 5 years ago.

Hi and welcome to JustAnswer:


As the recipient of a gift there is no income tax reporting required. The individual that made the gift should be filing a gift tax return (Form 709). There is no gift tax due unless they have made taxable gifts of $5 million or more.


However, in preparing your FAFSA form the receipt should be reported as "Money received . . ." Line 44(j) of the form.

Customer: replied 5 years ago.
What if the person giving the gift will not be reporting it either way? And when putting the Money recieved on line 44. Will this effect the status of pell grant as far as my status goes.

What if a person pays more than 10k for a vehicle with no currency exchange form signed just a bill of sale and they deccide not to report it? Would ther be anyway the Fed could find this information and audit a person.

Expert:  MequonCPA replied 5 years ago.

The person making the gift should report it. It has no tax consequence and proves that your "windfall" was truly a gift.


Regardless of what the individual making the gift does, you are required to report receipt as Money received from others. It is no different than if they gave you the cash and you bought the car. A receipt of any amount could affect your pell grant depending on other income/asset items on your FAFSA form.



Customer: replied 5 years ago.
Does it have to be reported?
Customer: replied 5 years ago.
Does it have to be reported?
Expert:  MequonCPA replied 5 years ago.


Customer: replied 5 years ago.
Can you explain the possible consequences if it isn't?
Expert:  MequonCPA replied 5 years ago.

The FAFSA includes the following warning on the front:

WARNING: You must fill out this form accurately. The information that you supply can be verified by your college, your state, or by the U.S. Department of Education.


You may be asked to provide U.S. income tax returns, the worksheets in this booklet and other information. If you can't or don't provide these records to your college, you may not get Federal student aid. If you get Federal student aid based on incorrect information, you will have to pay it back; you may also have to pay fines and fees. If you purposely give false or misleading information on your application, you may be fined $20,000, sent to prison, or both.

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