Say someone gives me $90k in cash and I put it in my checking account. How much and for how long do i pay tax

Question

This is just a question. I know i should invest in in tax free acounts like an IRA, I AM JUST WONDERING dont give me investment options

Answer 1

It depends on why you receive the $90K. Is it a gift? Then its tax free to you, any tax liability would be on the gift giver (although they have a million dollar exemption themselves). Was it a bonus from work? Then you're going to owe whatever regular federal and state income taxes you would normally owe, as well as any Medicare and Social security contributions as well. Was it a prize? Then you'll owe federal and state taxes on it then too. If you are worried about taxes, Id put it into a money market account until you have paid your 2007 tax bill, in the spring of 2008. That would be the only year in which taxes would be collected, so then you could invest it any way you want after that. A checking account is a poor way to proceed.

Answer 2

If the money is truly a gift, there is no tax on that money. Depending on the income earned on that money will determine the amount of tax. As long as the income exceeds all your deductions, you will always owe tax. Say you earn 10% (don't you wish), you would have an income of 9000 for the year. A single person with no dependants would then have taxable income of 550. (9000 - std ded 5150 - exemption 3300) Hope this is what you were looking for.

Answer 3

Assuming your checking account pays interest then you just pay income tax on the interest forever. The 90K is tax free.

Answer 4

If your checking account draws interest, then you'd pay tax on the interest for as long as you get interest.

Any other taxes depends on why they gave it to you. If it's just as a gift, then you don't pay income tax on it, although they would have to file a gift tax report, and they might or might not have to pay a gift tax. If they gave it to you for some kind of work that you performed for them, then it would be subject to income tax and self-employment tax in the year you received it.

Answer 5

90K? Your question lacks clarity. How, what & why.