i am getting alot of money from someone and i am wondering if i will have to pay taxes on it or if i can avoid paying taxes on it.
2006-09-29 10:46:14 · 11 answers · asked by dane 1 in Business & Finance ➔ Taxes ➔ United States
i am getting alot of money from someone and i am wondering if i will have to pay taxes on it or if i can avoid paying taxes on it. It is money that a family member got from a death in the family and they want to give some of it to me and other family members.
2006-09-29 10:53:46 · update #1
The recipient of a gift in the United States of America NEVER has to pay a gift tax to the federal government. If it were a lottery or prize or something, then yes, but never a gift. The giver of the gift may have to file a gift tax return if the amount was over $12,000, but if they haven't given over a million dollars of gifts yet in their lifetime, then they won't owe any tax on the gift. It doesn't mean they don't have to fill out the return, it just means they won't owe Uncle Sam when they mail in the return.
There are ways around the gift tax. For example, they could have given you $10K and your spouse $10K. Or, if they are married, the couple could have each given you $10K. Or, they could have given you $10K and a trusted friend $10K who, in turn, could have given you the same $10K. These are all legal transactions. Well, the friend thing may not be totally legal....but you get the drift.
Bottom line, the recipient never pays a gift tax and the giver rarely pays a gift tax unless they've given away tons of loot in their lifetime. They may have to fill out a 709...but those are easy to do.
Hope this clears things up, and please, don't accept even my answer without researching it yourself. Try publication 950 at the IRS web site listed below.
2006-09-29 19:15:32 · answer #1 · answered by TaxMan 5 · 3⤊ 0⤋
Wow... I only read one answer, but I'm hoping you're not worried about having to pay taxes on this money. Yes, there is a "gift tax", but it is paid by the giver of the gift, not the recipient. Yes, I know this is insane, but we're talking about the IRS, here.
Ok, so it's POSSIBLE, that the give would have to pay a gift tax on the money. However, this only comes in to play if they give more than $12,000 in one year ($24,000 if married), and then it goes against a lifetime giving "allowance" of $500,000! So don't worry about the Tax Man on this one, but definitely do get the giver some help to make sure the appropriate forms are filed.
I've attached the IRS publication on gift tax below.
2006-09-30 11:50:30 · answer #2 · answered by Katie Short, Atheati Princess 6 · 0⤊ 0⤋
The amount that someone can gift to another without paying taxes is $12,000 for 2006.
This being said if your relative is married he/she and thier spouse can each be considered as gifting you $10,000, and therefore slipping underneath the $12,000 amont. If the relative is not married and you are, then the gift may be considered split between you and your spouse so that there will be no income tax due on the amount.
Another possibility is your relative giving you $10,000 at the end of 2006 and another $10,000 at the beginning of 2007.
Another important point is that the giftor is the one who is liable for income tax on amounts over $12,000 to any individual. So you would not have to pay any tax on the amount. There is also a $1,000,000 lifetime exclusion on gift tax. So more then likly your relative would not have to pay any tax on his/her gifts. They would however be required to file form 709 US Gift Tax Return.
Hope this helps some
2006-09-29 12:27:21 · answer #3 · answered by newhouse 3 · 3⤊ 0⤋
If it is a gift, then, you are not responsible for any taxes (but the person who makes the gift will be liable for gift tax if the amount is higher than the annual limit or if the person has used up his/her lifetime limit). However, you get the $$ because of goods/services you provided, then, that would be considered income and you will be liable for income taxes.
2006-09-29 15:23:46 · answer #4 · answered by SoxPatsICY 1 · 2⤊ 0⤋
You need to move then, if you live in a place with a 11% sales tax from both state and city.
2016-03-18 02:48:38 · answer #5 · answered by Anonymous · 0⤊ 0⤋
No, you do not owe any taxes on a gift you received. The giver might be liable for some tax on this, called a gift tax.
2006-09-29 11:20:38 · answer #6 · answered by Judy 7 · 2⤊ 0⤋
If it is a bona-fide gift, you do not have to pay any taxes. The donor may have to pay a gift tax on it, however. But that's the donor's problem, not yours.
2006-09-29 20:34:36 · answer #7 · answered by Bostonian In MO 7 · 0⤊ 0⤋
If its a gift...HELL NO!!! If someone wants to give you that much money, they have every right to and you should NOT be liable for it! Why should the Government get their grubby hands on your gift?? I thought this country was founded on the backs of repressed tax payers trying to find a break? Where the hell is George Washington at??
2006-09-29 10:52:06 · answer #8 · answered by Herb R 2 · 0⤊ 4⤋
The person who gave it to you must fill out the correct tax forms if it is over $12,000.
You do not owe any taxes.
http://www.irs.gov/businesses/small/article/0,,id=108139,00.html
2006-09-29 10:49:47 · answer #9 · answered by Zak 5 · 4⤊ 0⤋
Let me guess... you are marrying so someone can get citizenship. Right?
Well... if it's cash, and you have an old used coffee can, who needs to know. Bury it, put it in the ceiling. Give it to someone to hold. Who do you trust?
Just don't take a check, as there is a paper trail.
2006-09-29 10:49:48 · answer #10 · answered by C P R 3 · 0⤊ 4⤋