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MequonCPA
MequonCPA, Certified Public Accountant (CPA)
Category: Tax
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Experience:  CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.
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Can I gift 14,000 each to my daughter, son in law and grand

Resolved Question:

Can I gift 14,000 each to my daughter, son in law and grand daughter and also same amounts by my wife and claim exemption from gift tax? do we need to file any form to notigy about our gifts
thanks
Submitted: 9 months ago.
Category: Tax
Expert:  MequonCPA replied 9 months ago.
Hi and welcome to JustAnswer:

Yes you can do that. There is no form required if you stay below the annual exemption. Please note that the $14,000 includes all gifts made to the individual during the year, birthday, anniversary, Christmas, etc.

You should also know that if you and/or your wife make gifts that exceed the annual exemption you will be required to file a gift tax return. However, there will be no tax to pay until your total lifetime taxable gifts exceed $5,250,000.
Customer: replied 9 months ago.

Hi Mequon,


Thanks for your quick reply. Our intention was to give about 100K for them towards their home buying. This way we thought we can give total 84,000 and on the balance 16,000 (we are planning to give separate checks of 14,000 each) we want to give another check and show as loan given to them at 5% interest payable quarterly. is our assumption right?


Thanks

Expert:  MequonCPA replied 9 months ago.
Hi Prasad -

In general, you are correct. However, technically the gift to your granddaughter should not be used to purchase the residence as she will not have an ownership interest. Her parent's as fiduciaries have a responsibility to segregate her assets and investment them wisely.

As I mentioned above, you can make gifts in excess of the $14,000. You would file a gift tax return, but no tax would be due. You could also make additional loans to your children and forgive them in future.

From a lender's standpoint, the amount you make as loans may not count toward the equity needed to make the purchase.
Customer: replied 9 months ago.

Thanks. Your answer triggered two questions. If I give more than 14K gift what form I should file. Do I need to pay tax on that later


If I give loan and forgive do they need to pay tax on such forgiven amount

Expert:  MequonCPA replied 9 months ago.

Hi Prasad -

 

You will file Form 709 US Gift Tax Return. Link to form and instructions below.

 

http://www.irs.gov/pub/irs-pdf/f709.pdf

 

http://www.irs.gov/pub/irs-pdf/i709.pdf

 

There is no tax to pay by you or your children on the gifts given assuming they don't exceed $5,250,000.

 

If and/or when the loan is forgiven, a gift occurs. If the value of the gift is below $14K no gift tax return is due in that year. If it exceeds $14K a filing will be required, but no tax will be due.

 

 

MequonCPA, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 2323
Experience: CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.
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