QUESTION
Will my parents have to pay gift tax on a large sum of money?
Asked on Oct 05th, 2011 on Taxation - Oregon
More details to this question:
My parents would like to give me a large sum of money upwards of $50,000. I am 22 and a full time student who they still claim as a dependent. Will they have to pay a gift tax since it is above the $13,000 yearly max? Or can they give me the money without paying taxes because I am a dependent?
2 ANSWERS
Bruce Givner
The amount is too small to generate a gift tax. Their annual gift exclusion is $13,000 each. Then they have lifetime gift exclusions of $5,000,000 each. So they should file gift tax returns, but no gift tax will be due.
Answered on Oct 06th, 2011 at 10:18 PM
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Amounts that qualify as support as well as amounts paid directly to the school for education do not count as a gift. Those should be paid directly rather than to you. Additional amounts in excess of $13,000 per year from each parent will require the filing of a gift tax return and use of some of their lifetime gift and estate exclusion (currently $5,000,000 each); however, no tax would be paid until the total gifts in excess of the annual exclusion exceed the lifetime exclusion.
Answered on Oct 06th, 2011 at 1:47 PM