She is recieving social security. Would she have to claim this on her taxes? Will this affect her social security for next year?
2006-09-17 04:43:23 · 8 answers · asked by moogierules 1 in Business & Finance ➔ Taxes ➔ United States
Your mother will NOT have to claim this on her return. However, if the payoff is more than $11000, then the person who pays it off for her may have to file a gift tax return. Yes, the person giving the gift is the one who pays the tax on it. Yes, I know how screwed-up that sounds, but it's the truth.
However, if your mother has been deducting the interest on her return, she may only deduct what she actually pays, not what someone else pays off for her, so be careful there.
I don't know how it will affect her Social Security. Sorry, that's just not my area of expertise, though I'm learning.
2006-09-17 10:03:39 · answer #1 · answered by Katie Short, Atheati Princess 6 · 0⤊ 1⤋
Your mother will not have to claim this as income. The person who pays off her house will more than likely have to file a gift tax return (the donee files this return anytime they have made gifts over the annual per person exclusion- which in 2006 is $12,000). However, unless that person has made substantial other gifts in his or here lifetime they will not owe tax. The lifetime unified credit for gifts is $345,800 which is the tax amount on one million dollars of gifts. If the person paying off you rmother's home has made more than one million dollars of gifts they will owe gift tax when they file the 709 (gift tax return). Since it is not being claimed on your mother's tax return I don't know how it could possibly affect her social security.
2006-09-17 18:03:11 · answer #2 · answered by FlCpa 3 · 0⤊ 0⤋
Assuming that she is receiving Social Security Retirement benefits, it will have no impact. Social Security Retirement is not a needs based entitlement. If you are eligible, you collect without regard to other income.
If someone paid off her mortgage, it would be treated as a gift. As such, it might be subject to the Gift Tax, however that has no impact on your mother. The Gift Tax is assessed on the giver, not the recipient.
2006-09-17 14:19:11 · answer #3 · answered by Bostonian In MO 7 · 0⤊ 1⤋
No, she wouldn't have to claim it, and no, it wouldn't affect her social security for the next year. Social security payments are based on work history, either your mom's or your dad's if she's collecting on his account. She doesn't get more because she has a mortgage payment, and would not get less if she doesn't. Now if she's getting SSI, that could be a different answer.
2006-09-17 13:13:38 · answer #4 · answered by Judy 7 · 1⤊ 1⤋
If someone pays her mortgage as a gift to her, then she will not have income as a result. It would be necessary to consider all the circumstances in order to advise you properly, so you or she should consult an attorney or CPA if there's a large amount at stake.
I can't speak to the social security question in general, but based on a quick search of the social security website, it does not appear that her benefits would be reduced unless this payment is considered "wages" or "net earnings from self-employment."
2006-09-17 12:21:21 · answer #5 · answered by TaxGuru 4 · 0⤊ 2⤋
If someone else pays off your mom's house, she must list that amount as income on her taxes.
What kind of social security is she on? If it is retirement benefits, it will not affect her. However, if she is on SSI or disability, SSA may stop paying her benefits or even go after her house.
2006-09-19 13:43:29 · answer #6 · answered by Anonymous · 0⤊ 0⤋
She may be subject to Federal Gift Tax based on the current value of the property if for whatever reason it cannot be collect for the giver. Before anyone does this "favor" for her, talk to a tax professional. It may not be much of a favor.
2006-09-17 13:39:00 · answer #7 · answered by misslabeled 7 · 0⤊ 4⤋
You need to talk with a tax advisor. Check with H and R Block. They are good people.
2006-09-17 11:53:00 · answer #8 · answered by ĴΩŋ 5 · 0⤊ 3⤋