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Good morning Lev. You stated that I can only give a " gift

" of only 14,000 per...
Good morning Lev. You stated that I can only give a " gift " of only 14,000 per year per person? If I give 1 amount to mom and another to 14 yr old son, is that ok?
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10/1/2013
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,132
Experience: Taxes, Immigration, Labor Relations
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Lev :

Hi and welcome to our site!
Let clarify first...
You may gift any amount or any asset value as a gift - there is NO limit.
However you may gift only up to $14,000 per year per person WITHOUT ANY GIFT tax consequences.
If your gift is above that threshold - you would be required to file a gift tax return.
The limit "per person" applies to each donee.
You may gift $14k to your some and another $14k to your mother - and that will not trigger any gift tax filing requirements. However if you gift $15k to your son and $12k to your mother - you will be required to file a gift tax return.

Customer:

So I can give 2 checks less than 14k per year and that should suffice. I thank you again.

Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,132
Experience: Taxes, Immigration, Labor Relations
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Yes - that is correct - you may make gifts to any number of persons - and as long as each gift will be not more than $14 per person per year - there will not be any gift tax consequences.
Gifts might be in form of the money, bank check, etc, or you may gift assets you own - in this case a fair market value of such assets is considered.
For instance - you may gift $14k to each of your 15 relatives - total $210k in 2013 - and still will not be required to file the gift tax return.
However - if you, for example, gift $15k to any single person in 2013 - the gift tax return would be required.
But if you make a gift $14 in 2013 and another $14k gift in 2014 to the same person - the gift tax return would not be required.
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Customer reply replied 4 years ago


I SPOKE TO THE FIDELITY MEMBER AND HE SAID I WILL BE TAXED ON WITHDRAWAL. CAN I TAKE OUT 2 AMOUNTS OF 13,500 EACH YEAR AND NOT BE TAXED AT ALL? ACCORDING TO MY 401K REPR WHO SAID I SHOULD SPEAK TO TAX SPECIALIST. I ONLY HAVE SS RECEIPT EACH MONTH. I AM ALLOWED UNLIMITED WITHDRAWAL WITH MY PLAN. IF I REQUEST 2 CHECKS FOR UNDER 14K WILL I BE TAXED FOR ADDITIONAL INCOME? AM CONFUSED BY AGENT.

Distributions from 401k plan are taxable.
That is regardless of how you use the money.
That is up to you if you want to gift the money - but you will not DEDUCT the gift to any specific person. Only gifts to qualified charities are deductible.

When you contributed funds into 401k - such contributions were excluded from taxable income - correct? That means - your tax liability were deferred until funds are distributed. So when eventually you are taking distributions - the distributed amount is reported as your taxable income.

We may estimate your possible tax liability which is based on following:
your filing status? - single? HOH? other?
do you have any dependents?
your annual social security benefits?
any other taxable income?

Please provide above information - and I will estimate your possible tax liability.
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Customer reply replied 4 years ago


AM DIVORCED NO DEPENDENTS $2,143.00 mo SS BENEFITS which is $25,716.00 annually NO OTHER TAXABLE INCOME

So - your filing status is single.
Assuming you are under 65.

If you take $30,000 distribution - your total federal tax liability is estimated as $4358
$25,000 distribution - $2971
$20,000 - $1643
$17,000 - $968
$15,000 - $643
$14,000 - $493
$12,000 - $200
$10,000 or below - no tax liability.
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Customer reply replied 4 years ago


I was going to take 2 amounts of $13,500 each. So I will have to place 27,000 as income as well as my social security annual amount and be taxed. How unfair is that. I can never thank you enough.

To minimize your tax liability - you may take distribution partly now and partly after Jan 1, 2014 - so the second part will be counted toward 2014.
Thus if you take $10k now and $10k on Jan 2, 2014 - there will NOT be any tax liability.

If you take $27k distribution now - your 2013 tax liability is estimated as $3526
Yes - in this case a part of your social security benefits will be added to taxable income.
Specifically - out of $25,716 - $9479 will be taxable.
So your total Adjusted Gross income (AGI) is estimated as $36479
Minus standard deduction $6100
and minus personal exemptions $3900
So your expected taxable income would be $26479 - that amount is used to calculate your tax liability.
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,132
Experience: Taxes, Immigration, Labor Relations
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Lev and 87 other Tax Specialists are ready to help you
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Customer reply replied 4 years ago


Thank you. Trying to help a mother and child is not easy. You are a true professional. Thank you.

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Lev
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 30,132
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