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Taxable Gifts Related Questions

Individuals giving or receiving gifts have wondered if the gift should be considered a taxable gift. Uncertainties of what a nontaxable gift is or what the maximum amount of a gift can be before it becomes a taxable gift often lead to questions like the ones answered below.

What are nontaxable gifts?

Generally nontaxable gifts include gifts that do not exceed the annual exclusion amount for the year of $13,000 per recipient. Nontaxable gifts can also include gifts to a political organization for their use, gifts to charities, gifts to a spouse, and tuition or medical expenses that is paid directly to that institution for someone. These gifts given in the fashion mentioned would not be taxable. Read below where Experts have answered many more questions about taxable gifts.

If a parent gives their child $100,000, would the gift be a taxable gift?

Gifts that are received are not counted as taxable income. The recipient would not have to claim any gift amount on their income tax return. It is not looked at as a taxable gift concerning the recipient. Donors of gifts may need to look at the gift as a taxable gift if it is over the $13,000 annual exclusion amount but only if it has exceeded the lifetime exclusion amount of a little over $5 million. The donor would need to file a gift tax return for amounts that would exceed the annual exclusion amount.

Is there a limit to the amount of a gift an individual can receive without the gift becoming a taxable gift?

Gifts are not taxable gifts to the recipient. An individual that is giving the gift can make as many gifts to as many individuals as they would like. The donor would need to pay attention to the annual exclusion amount to an individual which is $13,000 per recipient per calendar year. If the donor gifts more than the annual exclusion amount for a sole recipient then they would need to file a gift tax return Form 709.

A parent sells their land and homestead for $100,000 and immediately divides it up equally as gifts to their three adult children. Are these gifts taxable to the children?

Gifts are not taxable income in the US. This means that any recipient of a gift would not incur taxes on that gift. In addition the recipient does not need to report the gift on an income tax return. Donors of gifts would need to file a gift tax return if they give gifts that exceed the annual exclusion amount per individual recipient. They will not be liable for any gift taxes unless they exceed their lifetime exclusion amount which is currently set at a little more than $5 million.

My spouse died in November 2009. I want to gift the maximum allowed under NYS law to each of my children without it becoming a taxable gift. What is the amount that makes a gift taxable?

Gift taxes are governed by federal law not by state law. Donors of the gifts would be subject to taxes if their gift was a taxable gift. If a donor gives a gift of $13,000 or less to a recipient in a calendar year then there would be no tax on the gift. If the donor gave more than $13,000 to a recipient in a calendar year the donor would have to file a gift tax return but still might not have to pay a gift tax if they are under their own personal gifting exclusion amount. The lifetime gift exclusion amount is just a little over $5 million.

Having the right facts and understanding of taxable gifts can help when faced with circumstances regarding gift taxes. Experts can help answer what a nontaxable gift is or if there is a limit on the amount an individual can receive before the gift becomes taxable. Get the answers fast and affordably by asking an Expert.

Ask a Tax Professional

Wallstreet Esq.
Wallstreet Esq., Tax Attorney
Category: General
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Experience:  10 years experience
16356563
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Recent Taxable Gifts Questions

  • We live in community property state (California) and my wife

    We live in community property state (California) and my wife stays at home with no income. We've opened 529 account and planning to contribute $28k for our kid this year. I am trying to minimize amount of paperwork required coming tax season.
    Should contribution go in form of one check/two $14k checks from our joint account in CA ? Should we file 709? Can my wife write $14k check against our joint account assuming she didn't receive any income?
    Instructions to 709 are not pristine clear on the community property gifts that are below $14k limitation : "If a gift is of community property, it is considered made one-half by each spouse. For example, a gift of $100,000 of community property is considered a gift of $50,000 made by each spouse, and each spouse must file a gift tax return"
    Example above confuses me, does it say: "gift tax return should be filed because split is considered one-half by each" or does it say: "split will be applied automatically, no need to file 709 for contribution under $28k (2 x $14k)".
    Please make an answer as complete as possible with references to corresponding laws and forms.
  • Ive just realized another problem. Ive been studying in the

    I've just realized another problem. I've been studying in the US since 2006, graduated in 11/2010, and them had internship for one year without getting paid. Then I went back to China had half year internship and halfyear paid work. I came back to the US August last year, started to take MBA program while work for two organizations without getting paid. from 2006 to now, my only income that I made in the US is the interest I have received from my EB5 investment(0.5 million, interest income is less than 1000 a year.) This is the only income I have reported and paid tax for. All the other money that I receveid from my parents for living and tuition is not reported. How should I fix it if it has to be reported? P.S. I was holding F-1 visa from 2006 to 2012, and then I received green card in 2012.
  • Hi Lev, my dad passed away on Aug 30th and the value of his

    Hi Lev, my dad passed away on Aug 30th and the value of his estate is $1.8MM. He was a NJ resident. My research tells me that although not required, filing a 706 would result in a lower tax bite from NJ since the info from a pro forma 2001 706 form would go on his NJ IT Estate return. Do you agree?
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