QUESTION
How much tax do I have to pay on receiving money as a gift?
Asked on Sep 30th, 2013 on Taxation - Alabama
More details to this question:
A friend of mine is coming into some money and wants to give me 1 million dollars as a gift. Do I have to pay taxes on that money if so how much?
5 ANSWERS
Chapter 7 Bankruptcy Attorney serving Lisle, IL
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Mankus & Marchan, Ltd.
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A gift is not taxable to you under federal law; it is taxable to the donor. You and your friend should consult with a tax attorney.
Answered on Oct 02nd, 2013 at 9:44 AM
General Law Attorney serving Cherry Hill, NJ
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Mark S. Cherry, Attorney at Law, PC
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Gift tax is paid by the giver, not the recipient. .
Answered on Oct 01st, 2013 at 3:37 AM
As a general rule, you are not subject to tax on amounts received as gifts. However, your friend may be subject to state or federal gift tax on the transfer.
Answered on Oct 01st, 2013 at 3:35 AM
If the donor is a US citizen, he or she has a $5.12 Million gift tax exemption; it is a taxable gift but it would qualify for the exemption. The donor will have to file a gift tax return. If it is not that simple you should consult a tax attorney.
Answered on Oct 01st, 2013 at 3:15 AM
Tax Law Attorney serving Birmingham, AL
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Meadows & Howell, LLC
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When money is given as a gift, the recipient does not pay taxes on it. Rather, the donor pays what is known as a gift tax. There is an annual exclusion for gifts. This exclusion amount is currently $14,000. This essentially means that the donor does not have to pay gift taxes on the first $14,000 given, but would pay a gift tax on the remaining balance. Additionally, there is the possibility of using a portion of the donor's lifetime exclusion amount, thereby preventing any gift tax from being paid. This will, of course, reduce the remaining amount of the lifetime exclusion that the donor can use, but it is something to look into. It would be best to speak with an accountant regarding how to properly report and pay the gift taxes owed, or how to report the use of a portion of the donor's lifetime exclusion amount in order to avoid the gift tax altogether.
Answered on Oct 01st, 2013 at 3:13 AM