How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Guru_Guy Your Own Question
Guru_Guy, Lawyer (JD)
Category: Tax
Satisfied Customers: 2418
Experience:  I am a lawyer who understands tax law and finance.
Type Your Tax Question Here...
Guru_Guy is online now
A new question is answered every 9 seconds

If my parents pay off my mortgage do I have to claim that as

Resolved Question:

If my parents pay off my mortgage do I have to claim that as a gift?
Submitted: 10 years ago.
Category: Tax
Expert:  Guru_Guy replied 10 years ago.
You do not have to claim it, but your parents might.

Gifts are not considered taxable income. A recipient does not need to declare it nor pay any taxes.

Gift taxes, if assessed at all are assessed against the giver. Any gift under $12,000 per year need not be reported. So, if your mother gave you $12,000 and your father gave you $12,000 and they each gave your spouse (if there is one) there could be a combined gift of $48,000 all sliding under that $12,000 limit.

If the gift is more than $12,000, your parents would have to report the gift on form 709 on their next year's income taxes. You can view the form here:

However, even if the gift needs to be reported, it would not require that any taxes be paid unless your parents have already reached their $1 million lifetime limit. The first $1 million in reported gifts are tax free. After that, the gift tax kicks in on future gifts.

Reported gifts also reduce the amount of an estate exempt from taxation. For example, say your parents die with an estate worth $1.8 million, but they have already given away $500,000 in reported gifts. Normally the first $2 million in estate value is exempt from taxes. But since they already gave way $500,000, the limit is reduced to $1.5 million, so the $300,000 of the estate above that limit would be subject to federal estate tax.

So the bot***** *****ne is that you owe no taxes. Unless your parents are millionaires, they will probably never be affected tax-wise by the gift. But, if reaching that lifetime limit is a concern, it would be better to receive the gifts in chunks of $12,000 over a period of years.

I hope this helps!
Guru_Guy and 3 other Tax Specialists are ready to help you