Gift tax penalty? (professional)?

Question

Gave 75,000.00 a year for the last 10 years to one person. Gave 90,000.00 to one person last year. Gave 36,000.00 to one person every year for the last 5 years. Have never filed gift tax. How do you calculate percentage wise and how much would I owe the IRS now?

Answer 1

Please don't take advice from this board. This is a very complex issue where the ramifications for doing something incorrect could be disastrous. SEEK A PROFESSIONAL. For example, the limits mentioned from the previous answerer are estate limits, not gift limits. For tax years 2002 to 2010, the Unified Credits for Gift Tax is capped at $345,800 which is for gifts given up to $1,000,000. Translation: the first $1,000,000 in gifts you give (that are more than $11,000 per year per receipent) will not incur a tax on your behalf. The recipient never pays federal tax. The increasing amounts mentioned by the previous answerer refer only to estate tax. Since you are talking about gifts and since you have not passed away, please use the gift limits.

And, since you started giving these gifts prior to 2002, you will be dealing with different limits and exclusions. For example, the $11,000 per person per year "Annual Exclusion" drops to $10,000 from 1982 to 2001...as does the maximum credit.

You obvious have (or at least, had) plenty of money to afford to have a professional help you out. If you do it yourself and screw up, you could be out a lot more than the few hundred dollars a professional will charge you.

Good luck :)

Answer 2

Like this one. Assumed you are not married and beneficiaries are not married.

Bene #1 got $750k Bene #2 got $90k Bene #3 got $180k
Get $11k annual exclusion, per person per year.

Amount of taxable gifts given $844,000, if you died today you would have a $2,000,000 exclusion, of which you have used up $844,000

Based on the numbers you used up $600k after the 7th year, depending on what years you are talking about you could be ok. FILE THE RETURNS. The the statue of limitations does not start unless you disclose everything to the IRS by filing the 709 forms for all those years.

If not George Bush may just have decreased the Federal Deficit or Richard Hatch may get a cell mate.


Estate Tax
Calendar Year Estate Tax Exemption Maximum Rte
2001 $ 675,000 55%
2002 $1,000,000 50%
2003 $1,000,000 49%
2004 $1,500,000 48%
2005 $1,500,000 47%
2006 $2,000,000 46%
2007 $2,000,000 45%
2008 $2,000,000 45%
2009 $3,500,000 45%
2010 -- No estate tax in 2010 --
2011 $1,000,000 55%

Put me on your christmas list too! The gifters would not have to report the gift to the IRS, it is your responsiblity to file a 709 and pay any taxes due (if any)

Answer 3

For income tax purposes, you could not present them something. presents don't have any income tax consequences for both the donor or the donee. there's a present Tax, although, and that is levied upon the donor, no longer the recipient. you could present as a lot as $13,000 in line with 3 hundred and sixty 5 days in line with recipient to an limitless style of recipients without present tax submitting requirement. in case you exceed that to at least one or better recipients you should report a present Tax go back. quantities above the $13k annual exclusion are first used hostile for your lifetime exclusion of $a million,000,000. once it truly is exhausted, you initiate paying present Tax on all further presents for something of your existence.

Answer 4

Estate and Gift Tax
Generally, an estate tax return must be filed if the estate is more than the unified credit effective exclusion amount. This amount increases to $2,000,000 (from $1,500,000) for estates for tax-year 2006 through 2008, and increases to $3,500,000 for tax-year 2009. The amount remains $1,000,000 for gifts for tax-year 2006.

The estate and gift maximum marginal tax rates drop to 46% (from 47%). The rates drop to 45% by tax-year 2007.

The annual gift tax exclusion increases to $12,000 (from $11,000).

In 2010, the estate tax is repealed, as is the "stepped up" basis rule for inherited property.

Gift Tax

The gift tax applies to the transfer by gift of any property. You make a gift if you give property (including money), or the use of or income from property, without expecting to receive something of at least equal value in return. If you sell something at less than its full value or if you make an interest-free or reduced interest loan, you may be making a gift.

The general rule is that any gift is a taxable gift. However, there are many exceptions to this rule. Generally, the following gifts are not taxable gifts.

Gifts that are not more than the annual exclusion for the calendar year.
Tuition or medical expenses you pay for someone (the educational and medical exclusions).
Gifts to your spouse.
Gifts to a political organization for its use.
Gifts to qualified charities (a deduction is available for these amounts).
Annual Exclusion

A separate annual exclusion applies to each person to whom you make a gift. For 2002, 2003, 2004 and 2005, the annual exclusion is $11,000. Therefore, you generally can give up to $11,000 each to any number of people in 2002, 2003, 2004 and 2005, and $12,000 in 2006 and none of the gifts will be taxable.

If you are married, both you and your spouse can separately give up to $11,000 to the same person in 2002, 2003, 2004 or 2005 ($12,000 in 2006) without making a taxable gift. If one of you gives more than $11,000/$12,000 to a person in any one of these years, refer to gift splitting in Publication 950, Introduction to Estate and Gift Taxes.

Gifts to individuals are not deductible on the donor's income tax returns.

Related Links

Legal Information Institute
Thomas.gov (Legislative Information Site)


Where to File and Contact Information

Use the below mailing address for all tax forms filed at the Cincinnati Service Center including Estate and Gift tax returns:

Internal Revenue Service
Cincinnati, OH 45999

To mail FedEx packages, please use the following street address:

Internal Revenue Service
201 W. Rivercenter Blvd
Covington, KY 41011

For questions about return accounts and extensions only, (no tax law questions) call: 1-866-699-4083.

Many general estate and gift tax law questions can still be answered by calling: 1-800-829-1040. You may also find many answers to your questions by visiting Forms and Publications.

Answer 5

I would start by digging a Hole 3ft by 7ft and 6ft deep. The IRS is going to bury you, Specially when they find out those gifts were not reported by the people you gave them too, sounds fishy to me.