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If a parent is giving an early inheritance to an adult ...

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If a parent is giving...
If a parent is giving an early inheritance to an adult child, what is the tax liability for the receipient? The amount is $150k.
Submitted: 9 years ago.Category: Tax
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Answered in 35 minutes by:
6/14/2008
Tax Professional: Cassandra, Tax Preparer replied 9 years ago
Cassandra
Cassandra, Tax Preparer
Category: Tax
Satisfied Customers: 306
Experience: 8yrs experience in taxation for individuals. CTEC Registered and an Authorized E-filer with the IRS
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Hello Bobbie Grover and welcome to just answer.

A gift to the reciepient is not taxable income to the recipient. Now if we are talking about $150K in cash then the $150K would not be taxable, however if you were to invest the money in something that will earn you interest then the interest only will be taxable.

Gifts are taxable to the person giving the gift, however thier are exclusion for this too. First of All anyone can gift $12,000 to as many people as they want without causing themselves any gift tax. For example your mom can gift you $12,000 and your wife $12,000. Then your father could gift another $12,000 to each of you. Without any of this being taxable nor having to report any of this to the IRS. This is called gift splitting between the two parents.

Besides these methods their is also the Unified gift tax credit which can allow someone to gift up to $345,800 in a lifetime. A form 709 will have to be reported by the parents at tax time, but they will not have to pay gift tax if they don't use up thier total Unified gift tax credit.

Cassandra
Cassandra, Tax Preparer
Category: Tax
Satisfied Customers: 306
Experience: 8yrs experience in taxation for individuals. CTEC Registered and an Authorized E-filer with the IRS
Verified
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Experience: 8yrs experience in taxation for individuals. CTEC Registered and an Authorized E-filer with the IRS

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