QUESTION
If I wire $37K directly to a bank, to be used by daughter and her husband as down payment on a house, is that subject to a gift tax come tax season?
Asked on Sep 22nd, 2013 on Taxation - Michigan
More details to this question:
It is money from a life insurance policy from her late father (my ex husband). I was told by a CPA that you have a million dollars you can give away in your lifetime, so it wouldn't be subject to the tax, but I'm nervous about it.
4 ANSWERS
Business/ Commercial Attorney serving Bellevue, WA
at
Lana Kurilova Rich PLLC
Update Your Profile
If you are unmarried and you are giving a gift, you are limited to $13,000 per year if you do not want to chip out of your lifetime gift maximum. (For a married couple, this gift doubles). So you can give $13,000 to your daughter, and another $13,000 to your son-in-law. That is $26,000. If they had a kid, you could give another $13,000 to a kid. You see how this works? But in your case, because you want to give $37,000 to your daughter and her husband, that is more than $26,000, so you will need to file a gift tax return. There will be no tax, but that return will essentially chip out from your lifetime maximum. I would give $13K to daughter, $13K to son-in-law and do a gift tax return on the remaining amount. This is the process "by the book," so to speak. You will not owe any tax, but the tax return would essentially tell the IRS that you just chipped out from your lifetime maximum. I hope it makes sense.
Answered on Sep 24th, 2013 at 4:45 AM
Perhaps, you misunderstood the CPA or it was several years ago. In 2013, you can give over $5 million without federal gift tax. There is no Oregon gift tax. You are required to file a gift tax return when you file your income taxes in April. It is not difficult and will save you trouble later on.
Answered on Sep 23rd, 2013 at 2:35 PM
Appellate Attorney serving Grosse Pointe Farms, MI
at
Musilli Brennan Associates, PLLC
Update Your Profile
You should be filing a gift tax report which will be used against the unified deduction at your passing. You should see an attorney, and I would suggest couch this as a loan, and seek a security interest in the house securing it in the event the marriage does not work out, or they get into financial trouble.
Answered on Sep 23rd, 2013 at 1:56 PM
The gift tax exclusion is $14,000 for 2013. The difference (37-14) is deducted from your unified credit.
Answered on Sep 23rd, 2013 at 1:40 PM