I am getting a personal check from my grandparents for $19,400. It used to be in some sort of account that they had set up for my college but I am done with school and they are sending me the rest in the form of a personal check. While this was in the account it was taxed but the account was closed and the money is in their checking account. When they send this check to me, will I have to pay any sort of tax on it because the amount is large? Also because of the large amount do I have to report this to the IRS? The info that I have found leads me to think that because this isn't considered "cash" by IRS terms, I don't have to report it. Any help would be great!
2007-09-05 09:48:53 · 10 answers · asked by lidleanjel 1 in Business & Finance ➔ Taxes ➔ United States
The account was probably a 529 account - If your grandparents were the owner of the account they will owe tax on any growth in the account that was not applied to Qualified Higher Education Expenses.
If your grandparents gift you in excess of $12,000 each THEY will owe a gift tax return and POSSIBLY gift tax - not you! (Why do so many people give the wrong answer on that??)
One person mentioned that you will be asked to fill out a document for the bank - Just say that it was a gift from two individuals and you will be fine.
Good luck!
2007-09-05 10:06:54 · answer #1 · answered by FlCpa 3 · 0⤊ 0⤋
No, you will not be taxed. No, you do not have to report this to the IRS.
It is not an unusual transaction. It is not a cash transaction and probably will not be reported to the IRS by the bank (and if it is reported it is not anything to be concerned about).
If they write you one check, your grandparents will file Form 706 to account for this gift. If they choose the "gift splitting" option on Form 706, no gift tax will be owed by them and the gift will not effect the estate taxes either.
If your grandparents want to avoid Form 706, they can each give you half the money. Each grandparent can write you a check for $9,700. No Form 706 will be required, no gift or estate taxes will be imposed.
2007-09-05 10:39:55 · answer #2 · answered by ninasgramma 7 · 1⤊ 0⤋
No, you don't report it - not because it was a check and not cash (a check would be considered cash) but because it's a gift.
Since each of your grandparents could give you $12,000 in a year and not have to report it on a gift tax return, if it's from both of them, they won't have to report it either since it's under the allowable $24,000 for a year.
2007-09-05 13:41:57 · answer #3 · answered by Judy 7 · 0⤊ 0⤋
good news...
no, you don't pay and neither will your parents - and no one will report it.
first of all cash over 10000 gets reported to IRS but when IRS refers to cash they mean cold hard cash - green bills - not checks.
2nd each person is allowed to give 11 or 12 thousand a year as a gift free of gift tax. your grandparents together qualify for 22000 to 24000 free of gift tax and your check is under those amounts. If it was more your parents would have to file and pay gift tax, not you.
2007-09-05 10:07:07 · answer #4 · answered by goldenboyblue 3 · 0⤊ 1⤋
exciting. Now that i've got had time to think of roughly this, there replaced right into a call made to my mom's telephone # purely days after my dad surpassed. something approximately her filling out some form of learn poll approximately seniors with diabetes. Neither mom or dad had any form of diabetes, and we could no longer be certain the place this call got here from. We gave no techniques to the caller, and purely hung up. mom does not have caller id, so she does no longer be attentive to if that comparable variety referred to as returned, yet she is conscious to no longer answer any questions from an unsolicited caller over the telephone. She is likewise on the do no longer call itemizing, yet i don't be attentive to if she has had from now on calls approximately this. i will talk this along with her day after today, and spot approximately getting her caller id.
2016-10-10 00:40:33 · answer #5 · answered by ? 3 · 0⤊ 0⤋
You'll also find that whenever you deposit any amount over $9, 999 there will be a form to fill out, as the IRS tracks large deposits as a way of finding people who are laundering money...K ;o)
2007-09-05 09:59:13 · answer #6 · answered by Anonymous · 0⤊ 0⤋
If it is a true gift, probably not. If they are paying you to do some work for them, that is taxable. Actually cash (paper money) would need to be reported to the Treasury Dept so that they know it is not drug money or otherwise money-laundering-related.
2007-09-05 11:55:03 · answer #7 · answered by StephenWeinstein 7 · 0⤊ 0⤋
When you go to cash it, or deposit the bank will report it because they legally have to report anything over 10K Have them split it into two checks a week apart
2007-09-05 10:20:38 · answer #8 · answered by Pengy 7 · 0⤊ 1⤋
I believe you are allowed 10,000 or 11,000 per year tax free. It might be best to check with an accountant or CPA before you make the deposit. Laws are changing every year on gifts from relatives.
2007-09-05 09:58:14 · answer #9 · answered by Anonymous · 0⤊ 2⤋
You must pay taxes on gifts from family members in excess of $11,000 each year.
2007-09-05 09:56:34 · answer #10 · answered by lestermount 7 · 0⤊ 4⤋