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If we have given my sister in law money out with our

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If we have given my...
If we have given my sister in law money for helping out with our daughter and we have never claimed it as an expense, is that a problem? I don't know if she reports this income, but that's up to her. We just gift her the money. Could we get in trouble?
Submitted: 2 years ago.Category: Tax
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Answered in 3 minutes by:
3/1/2016
Tax Professional: Lev, Tax Advisor replied 2 years ago
Lev
Lev, Tax Advisor
Category: Tax
Satisfied Customers: 32,839
Experience: Taxes, Immigration, Labor Relations
Verified

In the US - gift - is not taxable income for the recipient and you do not need to report it on the tax return.

There is no any amount limit.

It does not matter how the gift is transferred - as long as that is a gift - there is NO income tax liability.

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Tax Professional: Lev, Tax Advisor replied 2 years ago

Please see for reference IRS publication 525 -

http://www.irs.gov/pub/irs-pdf/p525.pdf

Gifts and inheritances. In most cases, property you receive as a gift, bequest, or inheritance is not included in your income. However, if property you receive this way later produces income such as interest, dividends, or rents, that income is taxable to you.

.

HOWEVER - we need to be clear is that was a bona fide gift and NOT a payment for services - if that was a payment for services - the tax treatment is different.

.

I appreciate if you take a moment to rate the answer.
Experts are ONLY credited when answers are rated positively.
If you still have any doubts, need clarification - please be sure to ask.
I am here to help you with all tax related issues.

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