How much are taxes on a gift of cash?

Question

What would taxes be in the US on a substantial (maybe $40,000) gift of cash made to someone? Would both the giver and recipient be charged taxes or penalties?

Answer 1

The donor of the gift pays the tax. Bona-fide gifts are always tax-free to the recipient.

There is an annual exclusion of $12,000 per donor, per recipient. If a donor gives more than that to any ONE recipient then a Gift Tax return is required. Whether or not any Gift Tax will be due will depend upon the giver's lifetime gifting status. Currently the unified lifetime credit (linked to the Estate Tax exclusion) is $1,000,000. Until a donor has given taxable gifts that exceed both the $12,000 annual exclusion AND the unified lifetime credit amount, not tax will be due.

Because of the unified lifetime credit and the linkage of the credit to the Estate Tax exclusion, gift givers must keep permanent records of all gifts given and Gift Tax returns filed. The executor of their estate will need those when calculating any Federal Estate Tax due after they pass.

Answer 2

The receiver doesn't pay tax on a gift. The giver has to file a gift tax return if he or she gives over $12,000 in one year to any one person, but might not have to pay any tax on it - there's a lifetime exemption of $1 million that they can apply the gift against if they haven't already used it up.

Answer 3

Gifts are never taxable to the person who receives them. Person who gives the gift can give a gift up to $12,000 per person per year. If they exceed that amount they would have to file a gift tax return, but they have a lifetime exclusion of $1,000,000 to apply excess gifts against. So if they gave $40,000 they'd have to file the gift tax return, but not pay any taxes due to the lifetime exclusion, unless they had already used it up.

Answer 4

First, there is an annual exclusion for gifts, which is $12,000 per year, starting in 2006. To avoid all tax, this person could give you $12,000 over three years and neither of you would pay any tax (with the $4000 balance given in year four). No forms to fill out, no taxes owed.

If a couple is giving you the money (aka parents or grandparents), they can each give up to $12,000 per year, for a total of $24,000 per donee. In this case, you could have all the cash in two years, tax-free.

Other ways to avoid taxes is to have the person actually pay for certain services. These include college tuition or medical expenses.

If you simply have to get the whole amount in one lump, it is the donor who is primarily responsible for paying the tax.

Answer 5

You can give/receive up to $10,000 a year tax-free. Why not talk to the giver and see if they'll agree to just give ten thousand a year for the next four years? That way there'll be no gift taxes...and the gift tax is rather high.
Good luck!

Answer 6

presents are neither tax deductible to the giver nor taxable income to the recipient. interior the present is relatively great, the giver might might desire to pay a modern-day tax. The recipient by no potential has to pay federal income tax on a modern-day won. Edit to function: under modern-day regulation, somebody can present the different guy or woman a optimal of $13,000 in one year and not might desire to checklist that present. as quickly as the giver supplies greater effective than $1M in his/her lifetime a modern-day tax might word.

Answer 7

The first 3 responses are simply incorrect.

The 4th is correct except for the last item.

The 5th, 6th and 7th responses are correct and clarify the issues.

Answer 8

I believe the tax free limit is $10,000 to one person. Try an accountant.

Answer 9

I didnt think that there was tax on gifts...well not in england neways