4 ms·

From the horse’s mouth: https://www.irs.gov/businesses/small-businesses-self-employed/frequently-asked-questions-on-gift-taxes https://www.irs.gov/businesses/s

by DenisM 4y ago

From the horse’s mouth: https://www.irs.gov/businesses/small-businesses-self-employed/frequently-asked-questions-on-gift-taxes https://www.irs.gov/businesses/small-businesses-self-employe... TLDR: - gifts are not tax deductible. - gifts are taxable but only if above $17k per person. - gifts for medical expenses are excluded from taxation. I’m not a financial professional, this is not a financial advice.

thejteam 4y ago
Also not a professional, but to elaborate this means if you plan on giving your parents (with emphasis on the plural) 30k that means you can give each of them 15k (write 2 separate checks) and you come in under the 17k per person mark. Then you don't even have to file the gift form (I think it is 709...) and pay no tax.
- toomuchtodo 4y ago
  This also means if your parents have medical expenses, pay those expenses directly to exclude those gifts from your personal annual exemptions.
- lotsofpulp 4y ago
  > Then you don't even have to file the gift form (I think it is 709...) and pay no tax. You do not have to pay a tax anyway until you give away a total of $13M in your life, excluding any amounts you gifted that were less than $17k or less per person per calendar year.
denimnerd42 4y ago
Right so he should give 15k to his mom and 15k to his dad with separate checks or cash. If he is married they can give double without adding it to their return. There is also more info like a lifetime tax free limit but adding the form to the tax return is annoying regardless and it's best to save that limit for later.
viknesh 4y ago
This is pretty much wrong because it misses an important point, which is that this is only discussing the annual gift tax limits. The lifetime limits are currently 11 million, which means that the first 11 million you give will not be taxed.
- mindslight 4y ago
  Except if you give over the $17k/person, then you're supposed to file a federal 709 to report and track the lifetime amount, and if you're lucky enough to have estate tax it will add to that. Whereas if you're under the annual exclusion, there is no paperwork. So the vast majority of people want to just stay under the annual exclusion amount. If someone needs more than $17k this year, call the rest a loan and you can choose to forgive it next year.
  - jcheng 4y ago
    Technically a loan requires even more paperwork, I think? And you have to charge interest, even if you then forgive it (which also counts as a gift) you are required to first go through the motions. https://www.schwab.com/learn/story/family-loans-should-you-lend-it-or-give-it-away https://www.schwab.com/learn/story/family-loans-should-you-l...
    - mindslight 4y ago
      Yes, I misspoke when I said "there is no paperwork". The difference is that the loan paperwork does not have to be filed with the IRS, whereas a 709 does. These laws fundamentally exist to constrain how much wealth can be passed down outside of estate tax, which is the main concern of the article you have linked. If you don't quite cross all of the t's when giving a loan to an older family member (which is the complete opposite of trying to push wealth forwards in time), it's unlikely the IRS is going to be too concerned.
- KRAKRISMOTT 4y ago
  Do they stack?
henrikschroder 4y ago
> gifts are taxable but only if above $17k per person. No, if you exceed the annual per-person limit you have to report your gift, but you're not taxed on gifts unless you exceed the lifetime per-person limit of almost $13 million.

by DenisM 4y ago

thejteam 4y ago

Also not a professional, but to elaborate this means if you plan on giving your parents (with emphasis on the plural) 30k that means you can give each of them 15k (write 2 separate checks) and you come in under the 17k per person mark. Then you don't even have to file the gift form (I think it is 709...) and pay no tax.

toomuchtodo 4y ago
This also means if your parents have medical expenses, pay those expenses directly to exclude those gifts from your personal annual exemptions.
lotsofpulp 4y ago
> Then you don't even have to file the gift form (I think it is 709...) and pay no tax. You do not have to pay a tax anyway until you give away a total of $13M in your life, excluding any amounts you gifted that were less than $17k or less per person per calendar year.

denimnerd42 4y ago

Right so he should give 15k to his mom and 15k to his dad with separate checks or cash. If he is married they can give double without adding it to their return. There is also more info like a lifetime tax free limit but adding the form to the tax return is annoying regardless and it's best to save that limit for later.

viknesh 4y ago

This is pretty much wrong because it misses an important point, which is that this is only discussing the annual gift tax limits. The lifetime limits are currently 11 million, which means that the first 11 million you give will not be taxed.

mindslight 4y ago
Except if you give over the $17k/person, then you're supposed to file a federal 709 to report and track the lifetime amount, and if you're lucky enough to have estate tax it will add to that. Whereas if you're under the annual exclusion, there is no paperwork. So the vast majority of people want to just stay under the annual exclusion amount. If someone needs more than $17k this year, call the rest a loan and you can choose to forgive it next year.
- jcheng 4y ago
  Technically a loan requires even more paperwork, I think? And you have to charge interest, even if you then forgive it (which also counts as a gift) you are required to first go through the motions. https://www.schwab.com/learn/story/family-loans-should-you-lend-it-or-give-it-away https://www.schwab.com/learn/story/family-loans-should-you-l...
  - mindslight 4y ago
    Yes, I misspoke when I said "there is no paperwork". The difference is that the loan paperwork does not have to be filed with the IRS, whereas a 709 does. These laws fundamentally exist to constrain how much wealth can be passed down outside of estate tax, which is the main concern of the article you have linked. If you don't quite cross all of the t's when giving a loan to an older family member (which is the complete opposite of trying to push wealth forwards in time), it's unlikely the IRS is going to be too concerned.
KRAKRISMOTT 4y ago
Do they stack?

henrikschroder 4y ago

> gifts are taxable but only if above $17k per person. No, if you exceed the annual per-person limit you have to report your gift, but you're not taxed on gifts unless you exceed the lifetime per-person limit of almost $13 million.