My in-laws are being gracious enough to gift $40K. How should the money be transffered so as to avoid having to pay taxes on it. We are a family of four, myself, wife, and two sons (ages 5-9). If the answer involves giving gifts to the kids, how does gift money get to hime builder?
2007-02-17 04:36:28 · 6 answers · asked by BustedDreams 3 in Business & Finance ➔ Taxes ➔ United States
You have no tax consequences from the gift although your in-laws might as gift taxes are assessed on the donor, not the recipient. The annual Gift Tax exclusion amount is currently $12,000 per recipient for each donor. To avoid the Gift Tax, they each can give you and your wife $20,000. Bingo, no Gift Tax.
2007-02-17 05:37:03 · answer #1 · answered by Bostonian In MO 7 · 0⤊ 0⤋
The other answers are basically correct except that the annual exclusion is now 12,000 per year per donee. If they gift from a joint checking account each is gifting 20,000. If they make out checks to you jointly that is 10,000 for each of you from each of them and under the 12,000 limit. If they fail to do this they would need to file a gift tax return Form 709 and use up some of their lifetime exemption of 1 million. Still no tax due.
2007-02-17 05:13:55 · answer #2 · answered by spicertax 5 · 1⤊ 0⤋
This is easy, The gift exclusion per person is more than 10K now but lets us 10k to keep it simple.
Your in laws, I assume there are two of them each give you and your wife 10k each. They each have given 2 gifts of 10k each. So they've transferred 40k to you without using the any of the life time exclusion.
If they wanted to give you more then that they could also file a gift tax return and use part of thier life time exemption, but that counts agasint their estate when they decide to take the long dirt nap.
2007-02-17 04:42:06 · answer #3 · answered by Jerry 3 · 0⤊ 1⤋
If each of the in-laws gives $10K each to you and to your spouse (four $10K checks) then the gifts are below the reporting requirements.
Giving the money to the children would just complicate things - you do NOT want to do that.
2007-02-17 12:04:36 · answer #4 · answered by Judy 7 · 1⤊ 0⤋
Put it in a RRSP. You save paying tax if it goes directly into purchasing a home, and in the meantime, you also get intrest building.
2007-02-17 04:40:26 · answer #5 · answered by Anonymous · 0⤊ 1⤋
A couple can give $20K to an individual without incurring gift taxes, so have them give $20K to you and $20K to your wife.
2007-02-17 04:44:56 · answer #6 · answered by TheOnlyBeldin 7 · 0⤊ 1⤋