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PDtax
PDtax, Certified Public Accountant (CPA)
Category: Tax
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Experience:  35 years tax experience, including four years at a Big 4 firm.
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My wife and I are buying a home and her parents are giving

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My wife and I are buying a home and her parents are giving us $35,000.00. Should they (or do they have too) give us each checks separately? i.e., A check to my wife from her mom for $13,000 A check from her dad to my wife for $13,000 and then a check to me from either of the parents for $9,000. If they do this, do they have to do anything else come tax time? Or should they/could they just give us one check for $35,000 and then at tax time have their accountant break the gift up as detailed above so they do not have to pay any tax?

PDtax :

Hi from Just Answer. Gift tax is one of those things that doesn't make sense, until you review the thinking behind it. to Q & A...

Customer: replied 4 years ago.
What do you mean????

Gifts were one of the first ways people tried to get around US estate taxes, which are taxes on value. People would give gifts to the people who might inherit to avoid sometimes steep inheritance levies. Tax law has evolved to the point specific rules for gift taxes apply. When you give a gift over the exempt amount ($13,000), you use a part of your estate tax exception, known as the unified credit. If the donors have a taxable estate to be concerned about, gift taxes on current gifts, your question, come up.

 

The gift tax form, 709, allows the donors to split a gift between two spouses, so they can use one check. Two checks are not needed.

 

They can elect to pay the gift tax on the $9,000 or use some of their unified credit to make a tax free gift that reduces some of their unified credit. The gift tax, if one is to be paid, is due from the donor. Most elect to reduce their unified credit to avoid the 35% gift tax on value.

 

I hope this answers your question. Please advise if you need anything more. Thanks from Just Answer.

 

 

Wait a second, just reread your question. Her mom and dad can give tax free gifts to each of you. Dad can give 8750 to his daughter and son in law, and so can mom. $35,000 gifted, no tax to pay.

File the 709 gift tax returns by April 15, 2013.

Thanks again from Just Answer.
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Customer: replied 4 years ago.
So they can just give us one check for $35,000 then? And on form 709 they designate that it was $8750 to daughter and son in law from each of them? or should they do 2 checks of $17,500 (one to each of us) and then fill out the form 709 accordingly?
no, 2 checks, one to each of you. 2 709 forms, 1 for each gift.

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