Episode #125 of the Stack Overflow podcast is here. We talk Tilde Club and mechanical keyboards. Listen now
79

I would respond to your friend this way: "Either you are planning to do something illegal, in which case I don't want to be involved, or you are planning to do something legal, in which case you don't need me." Here's Why: What your friend proposes is completely pointless because if the money is legally his to give to you, then it's perfectly legal for your ...


53

Clooney may have been confused or misquoted. When he gives a friend a large gift, gift tax is owed. The giver pays this tax, not the recipient. Clooney would have been required to pay this tax. The gift is not considered income for the recipient, so it shouldn't impact their income taxes. This is a little different then when, for example, Oprah gives all ...


35

The United States taxes gifts to the giver, not the receiver. Thus, in your case there would be no direct tax implications from the receiver so long as you are gifting cash and the cash is in Canada. If you are gifting capital (stocks, property, etc.), or if you are gifting something that is in the United States (US stock, for example), there may be a tax ...


32

I understand $14k/yr $5.4M max This isn't the right way to say it. Your dad has a $5.4 million estate tax exclusion that can be used for gift tax. In addition to that (not instead or as part of), he and his wife each have a $14k/year gift tax exclusion. So if you aren't paying for two years from today, you actually have three years of gift tax exclusion: ...


32

There are some issues with this plan: you have to trust they will do what you want with the money. you have to hope that they won't need it. you hope that the presence of this investment fund doesn't impact their ability to get Medicaid coverage for their long term care needs. they have to die first. you have to trust that their end of life documents don't ...


31

You say that you inherited the money from your mother, and are now paying these people using money that is already yours. Because of that, the money is considered a gift from you to them, and the fact that you are doing it in accordance with your mother's wishes doesn't change that. For it to be considered a bequest from your mother's estate directly to ...


28

Your daughter can give you (and also as many other persons as she likes, for that matter) $14K or less each year as a gift without needing to file a Federal gift tax return. She does not have to report the money anywhere on her Federal income tax return or anywhere else. In particular, she does not get to deduct that money in arriving at what is called the ...


28

Gifts are not taxable income to the recipient. In the US, gift tax is paid by the giver, not the recipient. However, there is an annual gift exclusion amount (currently $15,000/year). Any gifts under that amount are not taxable and don't need to be reported to the IRS. This limit is per person, so your parents could give you up to $30,000 and have no ...


26

Am I right to say that no tax needs to be given for the annual ~$130k USD, since they are considered as annual gift tax exclusion? Not only that you're wrong, but it also looks like a tax fraud, not just mere avoidance. You'll have hard time proving to any judge or jury that the gifts are "in good faith". By the way, $5 a month is below minimum wage.


23

If you give a gift with stings attached, then it isn't a gift. Thus it would be viewed as trying to get around the tax law. The law regarding this is the Step Transaction Doctrine. But a spouse can also give a gift, and you can give a gift to your child's spouse. Thus a couple can give another couple 4x the limit each year. If the child is in school then ...


21

This is tax fraud, plain and simple. I recently wrote an article The Step Transaction Doctrine, in which I explain that a series of events may each be legal, but aggregate to one transaction and the individual steps are ignored. In this case, it goes beyond that, by accepting $5/mo you are already outside the tax code. As littleadv noted, you can't work ...


17

Firstly, there is also a lifetime gift+estate tax allowance. If the father's estate, including other gifts given in his lifetime, is unlikely to exceed that allowance, it might be simplest simply to give the whole amount now and count it against the allowance. Right now the allowance is $5.34M, but that seems quite a big political football and it's the ...


16

As littleadv points out, $13K can be given to each person per year without having to pay gift tax (or even file a gift tax return). So perhaps as much as $52K might be shielded from gift tax this year if you are buying the condo jointly with your spouse or significant other (SOSO) and your father and his SOSO each gift $13K to you and your SOSO. As for the ...


16

While there are no direct tax issues when a US citizen gifts another US citizen under the 14,000 threshold in a year, but there may be some other issues to be considered. You do not have a job this year. Are there any benefit programs that you participate in that would be impacted by accepting a gift of this size? Is gifting cash to you the best way to ...


15

You're right about your suspicions. I'm not a professional (I suggest you talk to a real one, a one with CPA, EA or Attorney credentials and license in your State), but I would be very cautious in this case. The IRS will look at all the facts and circumstances to make a claim, but my guess would be that the initial claim would be for this to be taxable ...


15

Under current US tax code, you can receive $14K from an unlimited number of people with no tax consequence to them. Yes, the burden is on the giver. There's an exception to most rules. If I gift you a large sum and don't fill out the required paperwork, paying the tax due, the IRS can go after the recipient for their cut. "Follow the money" is still going ...


15

Donations, particularly those in the context of you providing a free service (software, libraries, etc.) are a notable grey area in tax code. Simply naming a button "Donate" doesn't necessarily classify the money transfer as a "gift". The IRS can decide that it's money you're being paid to continue your excellent work/service, making it taxable income (...


15

Gifts are unconditional. Gifting someone money so he can gift it again on his name is not actually a gift. If discovered it would be fraud since you are giving your relatives money not as a gift to them but as a means to get around tax laws. Your relatives could reject to be part of a fraudulent schema1. While the IRS will probably not know automatically of ...


13

Gift taxes kick in at around $13K per giver per recipient per year. That means that a straight up gift of $200K (as cash or a house) will incur a tax. It is possible, however, that if the father has a spouse, he and the spouse could each give the mother and each child the full gift limit, for a total of about $78K per year, and that money could be used by ...


13

In almost all cases, gifts from employers are considered taxable compensation, based on the employer-employee nature of the relationship. Furthermore, cash gifts are always considered to be intended as wages, regardless of how you receive the money. Furthermore, regardless of whether you expect to receive anything in return (such as contractual ...


11

In 2015 there's a $5.43M (That's million, as in 6 zeros) estate exemption. Even though it's $14K per year with no paperwork required, if you go over this, a bit of paperwork will let you tap your lifetime exemption. There's no tax consequence from this. The Applicable Federal Rate is the minimum rate that must be charged for this to be considered a loan ...


11

For your status during the year, the date of your wedding doesn't matter. Jan 1 or Dec 31, you are considered 'married' for the year. In this situation, no gift tax issue applies.


11

In a perfect world, I'd look at the facts, and say that you were gifted 3 weeks interest by your mom. A bit less than $500, with no consequences. Your broker should lose his license. He counseled you (or your mother) to make a fraudulent statement. A true gift would require a Form 709 to declare the gift, and use up part of the lifetime transfer amount, ...


11

In the US, gift tax always falls on the donor, never the recipient, and gifts are not taxable income to the recipient. The IRS could raise questions if there is an employer-employee relationship between donor and recipient; your employer cannot give you money or property (e.g. a Rolex watch) or benefits (e.g. a house to live in rent-free) and claim that it ...


11

UGMA and UTMA accounts are in the name of a single child(Your daughter), the funds are not transferrable to another beneficiary. There are strict rules governing UTMA/UGMA accounts. As a custodian, you do not own the assets in the accounts; the minor ultimately owns the asset, however, you can make certain withdrawals from the account to cover expenses for ...


11

For a person to totally skip the gift tax provision, the money must be paid directly from the giver to the school. For example, if the grandparents want to pay for college they can send a tuition payment directly to the school. Even if the annual tuition is $30,000. Normally, a person can give $14,000 to another person without having to reduce their ...


10

It is correct, in general. Gift tax is indeed at 35%, but you have the first 14K of your gift exempt from it for each person you give to, yearly (verify the number, it changes every year). You can also use your lifetime exemption ($5.45M in 2016, subject to change each year), but at the amounts you're talking about it still will not be enough. Charitable (...


10

No tax consequences to you. Tax consequences to your sister. From your comment: My sister is single, but my wife and I have a son. So we can avail $14000 x3 = $42000 without the need to report it. The remainder ($70000-$42000) = $28000 will be reported against the lifetime exclusion by my sister on her return. Per my understanding, the $28000 is ...


10

There's no gift tax in the UK, so in general this won't be taxable to the recipient. The only exception is that the UK does have inheritance tax, and that can also apply to gifts given in the seven years before death. So, if all of these are true: You die within seven years of giving the money The money you gave was above the gift exemptions - in ...


9

Why limit yourself to $28K per year? If you pay the tuition directly to the institution, it does not count against your annual or lifetime gift-giving totals. You could pay the entire tuition each year with no tax consequences. The only thing you can't do if you want to go this route is give the money to your children; that's what causes the gift tax to ...


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