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Richard
Richard, Tax Attorney
Category: Tax
Satisfied Customers: 54012
Experience:  29 years of experience as a tax, real estate, and business attorney.
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Hello, I have several questions that Im hoping you can

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Hello,

I have several questions that I'm hoping you can help me with. During the past several years, I received income from various sources, most of which came from my parents in form of help, gifts or loans. According to my previous CPA, gifts, help from family and family loans are not considered taxable income. However, after conducting some research during the past several months, I read various articles and each article states something different. I am currently at loss as to whether my CPA's advice was correct or not. Below is what I received, please let me know if I am liable:

Gifts from parents exceeding the annual limit (I don't believe my parents paid taxes on the amount exceeding the limit. Does that make me liable, or is it still their liability?

Help: I faced some personal issues and my father helped me in the form of gifts (not to be repaid). Meaning, I fell into financial trouble and my parents gave me money to get by.

Wedding: Present in the form of money for my wife and I on our wedding from family.

Personal loans from parents that are to be repaid whenever I am able to do so. No specific time or amount. No written agreement. Only verbal agreement.

Now, according to my previous CPA, I am not liable for any of the above. He said gifts are not taxable unless they exceed the limit and even if they do, the tax falls on my parents and not myself. However, when I asked my parents, they seemed clueless about this law.
He also said "help" that is not repayable from parents is also considered a gift and not taxable. And finally, he said loans are not taxable. Please advise.

Thank you
Welcome! My goal is to do my very best to understand your situation and to provide a full and complete answer for you.

Good morning. Your CPA is correct. Gifts, even those in excess of the annual gift exclusion limits, are not taxable to the recipient. Furthermore, loans are not income because they are obligated to be repair and thus do not increase your net worth...i.e., the money you have received is simply offset with an obligation to repay that money. And, it is not a gift because you are obligated to repay the loan. Thus, you have no income or gift tax and no reporting obligation as the recipient.



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