QUESTION
When do you have to pay taxes on a cash gift?
Asked on Oct 14th, 2013 on Taxation - Michigan
More details to this question:
Do I have to claim a $5,000 cash gift from my grandparents? Do they have to claim anything?
4 ANSWERS
Taxation Law Attorney serving Glendale, CA
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Irsfeld, Irsfeld & Younger LLP
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Gifts are not subject to income tax. Gift tax never applies unless the donor/giver give more than $13,000 during one calendar year to a recipient. No tax at all in this case.
Answered on Oct 15th, 2013 at 10:01 AM
Business/ Commercial Attorney serving Bellevue, WA
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Lana Kurilova Rich PLLC
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No, if your grandparents are married, they can gift you up to $26,000 per year tax-free. You do not pay tax on this gift; however, the burden of proof is on you to show the IRS (if you are ever audited) that this was in fact a gift. So your grandparents should write you a letter that they are gifting you this money. I would prefer it to be a check, rather than cash, because a check can be copied for records and easily traced to them, whereas cash can come from anywhere.
Answered on Oct 14th, 2013 at 6:38 PM
No, there is no gift tax owed on a $5,000 cash gift. As long as there are no other gifts from the same donor to the same person in the same year.
Answered on Oct 14th, 2013 at 6:37 PM
Your grandparents can claim a gift exemption.
Answered on Oct 14th, 2013 at 6:36 PM