I want to give my daughter a large sum of money, what are the tax implications?

Question

Amount would be about 150,000

Answer 1

What you're talking about is a gift. You may give up to 12,000 per annum (inflation adjusted so the number can change) without any implications. If you were to give 150,000 you will need to file a form 709 to report the gift. I assume you're married so you can elect to split the gift. You and your wife can each give 12K tax free. You may also want to, if your daughter is married make gifts to her husband as well.

You can also make gifts on December 31, or any date in the current year, and again on January 1 or any date of the next year to maximize your annual exclusion. If the amount is for Medical or Education expenses you can pay direct to the medical provider or educational institution (Tuition only) and there is no gift tax imposed.

If you have never made a taxable gift in the past (Gift tax is measured cumulatively throughout your life) you will not owe any tax, you will only use your unified credit. (Unified credit is the tax on the first 1,000,000 of lifetime gifts) You are not subject to tax on the first 1,000,000 so it's kind of like a gimme.

I suggest you speak to a tax/trusts and estates attorney or CPA for more advice. The 709 should take a tax pro about 1/2 hour if your only making gifts of cash.

You can read the code sections that pertain to this look at IRC 2503 and the instructions for IRS form 709.

You also need to consider state tax implications - there are still a couple of states that impose a gift tax. I know Connecticut is one of them, I also belive California does too. (Not sure on CA).

Answer 2

Gift, loan, whatever. If her parents want to give you the money to buy the house, that's fine. Anyone can give up to $13,000 to anyone. Wife's dad can give you $13,000, and wife's mom can give you $13,000, and they make the same gifts to your wife. A married couple can give $52,000 in a year to another couple. That's a staple in parents giving stuff to their kids. There may be a gift tax return to be filed, you have to report "gift splitting," which means a married couple must report the gifts over $13,000 even though they are not taxable. The tax code has the gift amount because family members give stuff to other family members all the time. If they didn't have that exclusion, everybody would have to keep books if they let their deadbeat brother in law stay at their place for a couple months. It's an important purchase. Real estate has different rules from most things. I's must be dotted and T's must be crossed. Spend the money to get good advice on how to structure this transaction. Call around to some places and you'll be able to tell if they're experienced at this or not, and you can get comfortable with them. This is not a complicated super-expensive task, but it will cost you some money to get expert advice to keep this clean and keep you out of trouble.

Answer 3

No tax implications unless you've given very large sums of money to other people in your lifetime (Unified Credit to Gift Tax).

Answer 4

There are many answers. The one you what to know about (just a guess) is that it will have no effect in the current year...except that you have to file another tax form.

If your gifts to her exceed the allowable amount for gifts (this changes yearly) then it is applied to the estate tax exemption. Then it depends on the amount of the estate if there will be a tax or not. However, if there is your estate will pay the tax not your daughter.

Answer 5

Note: California does not have a gift tax for gifts made after June 18, 1982

Answer 6

You'd have to file a gift tax report. Unless you have already used up your $1,000,000 lifetime exemption, you wouldn't have to pay any tax on the gift.

Answer 7

Tax implication for whom? You or her? None for you. Since you don't say where you live, that's difficult to answer.

Answer 8

i think you have to pay a gift tax because its more than 10k. But you get about 600k of untaxable gifts, so unless you given away 450k in your lifetime its tax free. I think - i just read this somewere i have no idea what im talking about.