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If a grandparent were to give each of her grandchildren (4) ...

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If a grandparent were to...
If a grandparent were to give each of her grandchildren (4) a gift of cash, what would be the maximum amount she could give to each and what amount would the grandchild be responsible for paying taxes on?
Submitted: 9 years ago.Category: Tax
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Answered in 3 minutes by:
7/1/2008
Tax Professional: RD, Certified Public Accountant (CPA) replied 9 years ago
RD
RD, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 8,784
Experience: CPA, MBA, Over 10 yrs of experience in tax planning and business consulting..
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She can give upto $12000 per grandchildren ($24,000 per child if her spouse joins in the gift) without owing any gift tax or requiring her to file a gift tax return.

She can give gift over this amount too but in that case she will have to file a gift tax return. She may not owe any gift tax as long as she does not exceed $1 mn. in taxable gifts in her lifetime.

Gift received by the donee(recipient) is not income and hence is not taxed to the recipient.

 

Let me know if you have any question.

 

Please note: This advice is provided with the understanding that all the relevant facts have been provided by you. Any change in facts might affect the advice given and hence may not be relied on in such cases. Nothing contained in this reply was intended or written to be used, can be used by any taxpayer, or may be relied upon or used by any taxpayer for the purposes of avoiding penalties that may be imposed on the taxpayer under the Internal Revenue Code of 1986, as amended.

 

 

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Customer reply replied 9 years ago
Reply to RD's Post: If said grandparent were to go into a nursing home shortly after giving cash gifts and ran out of money in a years time to private pay can the government say that the gift money belongs to here estate?
Tax Professional: RD, Certified Public Accountant (CPA) replied 9 years ago
They can.

By law, Medicaid can investigate to see if you gifted away any assets within the three years prior to your application. If so, they will deny you benefits for the number of months those assets would have paid for. So you might want to give as much gift as possible to reduce your estate when you are in good health.

Let me know if you have any question.

 

Please note: This advice is provided with the understanding that all the relevant facts have been provided by you. Any change in facts might affect the advice given and hence may not be relied on in such cases. Nothing contained in this reply was intended or written to be used, can be used by any taxpayer, or may be relied upon or used by any taxpayer for the purposes of avoiding penalties that may be imposed on the taxpayer under the Internal Revenue Code of 1986, as amended.

RD
RD, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 8,784
Experience: CPA, MBA, Over 10 yrs of experience in tax planning and business consulting..
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