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For LEV only : We are a family of husband , wife and 11

For LEV only : We are...
For LEV only :

We are a family of husband , wife and 11 yrs old son living in US on US Green Card . Please clarify the below :

(1) If the unearned income of my 11 yrs old kid is less than $1000 in a year (assuming there is no other any type of income to the kid) , neither the kid nor the parent need to report it anywhere in any income tax return , .........................is that correct ?

(2) As i know that either a US Green Card Holder or a US Citizen can give gift of $14,000 to each person each year without filing Gift Tax Return or reporting anywhere including his Income Tax Return , ................ am i correct ?

(3) As i know there is no such limit of gift of $14,000 between husband & wife whether they both are GC Holders or US Citizens , ................. am i correct ?

(4) Does this limit of $14,000 also apply when a parant gifts cash to deposit in kid bank account of my 11 yrs old son when both (parent & kid) are US Green Card Holders ?

(5) Is any difference in the rules of Gifts in cash or kind in the 2 situations (i) when gift giver and taker both are US Green Card Holders , and (ii) when gift giver and taker both are US Citizens ?
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Answered in 4 hours by:
8/4/2013
Lindie-mod
Category: Tax
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Hello,

I'm Lindie, and I’m a moderator for this topic. I sent your requested professional a message to follow up with you here, when they are back online.

If I can help further, please let me know. Thank you for your continued patience.

Best,

Lindie

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Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,133
Experience: Taxes, Immigration, Labor Relations
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Hi and welcome to Just Answer!
(1) If the unearned income of my 11 yrs old kid is less than $1000 in a year (assuming there is no other any type of income to the kid) , neither the kid nor the parent need to report it anywhere in any income tax return , .........................is that correct ?
Yes - that is correct. Parents do not include child's income into their income and the child is not required to file because income is below filing requirements.
(2) As i know that either a US Green Card Holder or a US Citizen can give gift of $14,000 to each person each year without filing Gift Tax Return or reporting anywhere including his Income Tax Return , ................ am i correct ?
Yes - that is correct. Gift is not taxable income for INCOME tax purposes - and regardless of value the gift is not reported on the income tax return. The threshold of $14,000 is related to GIFT tax and GIFT tax return. The gift below $14,000 in 2013 per person per year is considered not taxable gift and the gift tax return is not needed.
(3) As i know there is no such limit of gift of $14,000 between husband & wife whether they both are GC Holders or US Citizens , ................. am i correct ?
Indeed unlimited - gifts made to a US citizen spouse are exempt from gift taxes because of the unlimited marital deduction. However gifts made to a not a US citizen spouse might be taxable for gift tax purposes. The threshold is $143,000 for 2013. Thus - gifts above $143,000 between spouses made to the spouse who is a GC holder are taxable for gift tax purposes - but not for income tax purposes.
(4) Does this limit of $14,000 also apply when a parent gifts cash to deposit in kid bank account of my 11 yrs old son when both (parent & kid) are US Green Card Holders ?
Yes - the $14,000 threshold is applied to all gifts including gifts from the parent to child. However - it is applied separately to each parent. Thus - each parent may make separate deposit - total up to $28,000.
(5) Is any difference in the rules of Gifts in cash or kind in the 2 situations (i) when gift giver and taker both are US Green Card Holders , and (ii) when gift giver and taker both are US Citizens ?
For gifts to a child - there is no difference. For gifts between spouses - a different marital deduction applies - see above.
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Customer reply replied 4 years ago


Please clarify in detail on the below :



In reference to your answer # XXXXX , as i understand that if my 11 yrs old kid's unearned income is less than $1000 in a year (assuming there is no other earned income) , then no reporting to IRS needed and no filing needed ........................................... am i getting right ?


 


I am little confused because when i asked some local tax person about this , i was told that every penny is to be reported to IRS . What is all this which does not even sound logical ?


 


In reference to your answer # XXXXX , as i understand that any person (either Green Card Holder or US Citizen ) can give $14,000 gift in cash or kind to each person each year without reporting it as gift ..........................am i getting right ?


 


In reference to your answer # XXXXX , as i understand that if me and my spouse both are US Citizen , then there is no limit of gift exchange in cash or kind between me and my wife and no Gift reporting is required and no gift tax return .................................. am i getting right ?


 


but because at present me & my wife are US Green Card Holders , so the gift amount (in cash or kind) is not unlimited between me and my wife and my wife can gift me maximum $1,43,000 in each year or i can gift her maximum $1,43,000 in each year without reporting it anywhere as gift or no Gift Tax Return needed ................................... am i getting right ?


 


In reference to your answer # XXXXX , When parents spend for the education or college fees of his son , is it considered Gift and do the limit of $14,000 apply here ?

Customer reply replied 4 years ago

Please clarify in detail on the below :


 


 


In reference to your answer # XXXXX , as i understand that if my 11 yrs old kid's unearned income is less than $1000 in a year (assuming there is no other earned income) , then no reporting to IRS needed and no filing needed ........................................... am i getting right ?


 


 


 


I am little confused because when i asked some local tax person about this , i was told that every penny is to be reported to IRS . What is all this which does not even sound logical ?


 


 


 


In reference to your answer # XXXXX , as i understand that any person (either Green Card Holder or US Citizen ) can give $14,000 gift in cash or kind to each person each year without reporting it as gift ..........................am i getting right ?


 


 


 


In reference to your answer # XXXXX , as i understand that if me and my spouse both are US Citizen , then there is no limit of gift exchange in cash or kind between me and my wife and no Gift reporting is required and no gift tax return .................................. am i getting right ?


 


 


 


but because at present me & my wife are US Green Card Holders , so the gift amount (in cash or kind) is not unlimited between me and my wife and my wife can gift me maximum $1,43,000 in each year or i can gift her maximum $1,43,000 in each year without reporting it anywhere as gift or no Gift Tax Return needed ................................... am i getting right ?


 


 


 


In reference to your answer # XXXXX , When parents spend for the education or college fees of his son , is it considered Gift and do the limit of $14,000 apply here ?

In reference to your answer # XXXXX , as i understand that if my 11 yrs old kid's unearned income is less than $1000 in a year (assuming there is no other earned income) , then no reporting to IRS needed and no filing needed am i getting right ?
That is correct - no need to report - and there is no tax liability.

I am little confused because when i asked some local tax person about this , i was told that every penny is to be reported to IRS . What is all this which does not even sound logical ?

There are reporting requirements. So not every penny is reportable.
Specifically - see page 4 - 2012 Filing Requirements for Dependents - http://www.irs.gov/pub/irs-pdf/p501.pdf
As you see in 2012 if unearned income of the dependent is below $950 - no need to report that income and no need to file the tax return and there is no tax liability.
The filing requirement threshold is adjusted every year.

In reference to your answer # XXXXX , as i understand that any person (either Green Card Holder or US Citizen ) can give $14,000 gift in cash or kind to each person each year without reporting it as gift ..........................am i getting right ?

Yes - that is correct.


In reference to your answer # XXXXX , as i understand that if me and my spouse both are US Citizen , then there is no limit of gift exchange in cash or kind between me and my wife and no Gift reporting is required and no gift tax return .................................. am i getting right ?

Yes - that is correct.

but because at present me & my wife are US Green Card Holders , so the gift amount (in cash or kind) is not unlimited between me and my wife and my wife can gift me maximum $143,000 in each year or i can gift her maximum $143,000 in each year without reporting it anywhere as gift or no Gift Tax Return needed ................................... am i getting right ?

Yes - that is correct.

 

In reference to your answer # XXXXX , When parents spend for the education or college fees of his son , is it considered Gift and do the limit of $14,000 apply here ?
That is correct - certain gifts are excluded from 14,000 per person per year limitations. In particular - tuition or medical expenses you pay for someone (the educational and medical exclusions) are excluded if paid directly to the educational and medical organization.
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,133
Experience: Taxes, Immigration, Labor Relations
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Customer reply replied 4 years ago

I have accepted your answer .


 


Can u plse give me some reference link mentioning the limit of $143000 each year gift between husband & wife who are US Green Card Holders and no limit if US Citizens .

Appreciate you for accepting the answer
and I am glad to be helpful.

Please see instructions - second page - middle column - http://www.irs.gov/pub/irs-pdf/i709.pdf
Gifts to your spouse. You must file a gift tax return if you made any gift to your spouse of a terminable interest that does not meet the exception described in Life estate with power of appointment, or if your spouse is not a US citizen and the total gifts you made to your spouse during the year exceed $139,000.
...
Except as described above, you do not have to file a gift tax return to report gifts to your spouse regardless of the amount of these gifts and regardless of whether the gifts are present or future interests.

Please be aware that instructions are for 2012 and the threshold $139,000 was in effect in 2012.
For 2013 the limit is changed to $143,000
Instructions for 2013 are expected to be updated before the filing season.

That and some other updates are published in Rev. Proc. 2012-41 - http://www.irs.gov/pub/irs-drop/RP-12-41.pdf
see page 8 - .19 Annual Exclusion for Gifts.
(1) For calendar year 2013, the first $14,000 of gifts to any person (other than gifts of future interests in property) are not included in the total amount of taxable gifts under § 2503 made during that year.
(2) For calendar year 2013, the first $143,000 of gifts to a spouse who is not a citizen of the United States (other than gifts of future interests in property) are not included in the total amount of taxable gifts under §§ 2503 and 2523(i)(2) made during that year.
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