my husbands company co-workers are putting money in my account after his death to help me pay for his funneral. Do I have to pay taxes on contribution? Can I just show proof to IRS where it has gone.I also put it into our childrens college 529.
2007-10-11 00:57:02 · 4 answers · asked by jegbabys 2 in Business & Finance ➔ Taxes ➔ United States
As long as you did not request the money and as long as his former co-workers don't get anything back from you in return for their donations you may consider this as a bona-fide gift. The recipient of a gift NEVER pays taxes on it and unless a single donor gave you more than $12,000, neither will any of the donors.
There will be no tax on these funds. You can generally do whatever you please with the funds.
My condolences on your loss.
2007-10-11 02:06:18 · answer #1 · answered by Bostonian In MO 7 · 3⤊ 0⤋
The contributions on behalf of your husband are not taxable and are not reported on your tax return.
You can use the contributions for your children's 529 plans and not pay any taxes on those contributions.
You do not need to prove to the IRS how the money was spent. If the IRS had any question, it would be where the money came from. Keeping a record of the deposits would not be a bad idea. Your copies of thank you notes or acknowledgements would also be good documentation.
Your state may have a tax deduction available for contributions to 529 plans, so check that out.
2007-10-11 09:26:17 · answer #2 · answered by ninasgramma 7 · 2⤊ 0⤋
It sounds like a gift - and you don't report or pay tax on gifts.
Sorry for your loss.
2007-10-11 11:24:29 · answer #3 · answered by Judy 7 · 0⤊ 0⤋
That is probably taxable income.
You may want to discuss it with your tax advisor.
2007-10-11 08:38:18 · answer #4 · answered by Anonymous · 0⤊ 4⤋