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CaMacho
Sisters :)
Member since 7/06 15112 total posts
Name:
Jess
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Giving/receiving $$$ and penalties...
We were talking about this at work this morning and I tried doing some google searches, but figured you guys always have the answers so...
My co-worker wants to give his daugher and soon to be son-in-law a large amount of $$ in advance for their wedding expenses and CC bills they already have (not sure exactly how much, but he said it's over the amount that wouldn't be taxed).
Would he get taxed AND the daughter and how much? Is there a way around it, like if he just pays their credit cards off from his checking acct... or is that still considered a "gift"?
I'm curious now too...
TIA!
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Posted 8/15/07 9:31 AM  |
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nov04libride
big brother <3
Member since 5/05 14672 total posts
Name:
Me
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Re: Giving/receiving $$$ and penalties...
There is a set amount you can give per year as a gift without being taxed. He has a few options...If he has a few years, he can give the max gift per year, or he could give that amount to both the daughter and SIL separately (treated as 2 different people then pre-marriage), or he could write checks directly to the wedding hall and wedding expenses...I don't think it would be considered a gift if he writes the check directly to the credit card company, but not positive about that.
ETA: Never been on the receiving end of such a gift myself  but this came up in conversation lately.
Message edited 8/15/2007 9:42:11 AM.
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| Posted 8/15/07 9:33 AM |
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ml110
LIF Adult
Member since 1/06 5435 total posts
Name:
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Re: Giving/receiving $$$ and penalties...
i beleive the amount is 20,000 before it gets taxed. and i believe its 20K per person. SO, if he is married, he could give the daughter 20K from "him" and then another 20K from "his wife" ( the girls mom). so i bleive they could give her a total of 40K and not be taxed. friends of ours did this... they ended up getting money from each of their parents this way for a down payment towards a house, and i believe this is how they got around it.
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| Posted 8/15/07 9:37 AM |
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CookiePuss
Cake from Outer Space!
Member since 5/05 14021 total posts
Name:
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Re: Giving/receiving $$$ and penalties...
You have a lifetime gift exclusion of 1,000,000 in which the giftor would not have to pay gift taxes on that gift but would have to file a gift tax return. There is an annual gift tax exclusion of $12,000.
Message edited 8/15/2007 9:39:30 AM.
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| Posted 8/15/07 9:39 AM |
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CaMacho
Sisters :)
Member since 7/06 15112 total posts
Name:
Jess
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Re: Giving/receiving $$$ and penalties...
So would the daughter be taxed at all or does that depend on the amount too??
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| Posted 8/15/07 9:40 AM |
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CaMacho
Sisters :)
Member since 7/06 15112 total posts
Name:
Jess
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Re: Giving/receiving $$$ and penalties...
Posted by shamrock124
You have a lifetime gift exclusion of 1,000,000 in which the giftor would not have to pay gift taxes on that gift but would have to file a gift tax return.
Interesting... so he'd have to file a gift tax return at tax time? And is he going to get penalized?
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| Posted 8/15/07 9:42 AM |
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CookiePuss
Cake from Outer Space!
Member since 5/05 14021 total posts
Name:
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Re: Giving/receiving $$$ and penalties...
Posted by CaMacho
So would the daughter be taxed at all or does that depend on the amount too??
The daughter would not be taxed as she is receiving the gift. The person giving the gift is responsible for any taxes that may be owed. I believe, althought I am not certain, the giftee may have to file a form with their taxes indicating the gift but not for the purpose of taxation.
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| Posted 8/15/07 9:43 AM |
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CookiePuss
Cake from Outer Space!
Member since 5/05 14021 total posts
Name:
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Re: Giving/receiving $$$ and penalties...
Posted by CaMacho
Posted by shamrock124
You have a lifetime gift exclusion of 1,000,000 in which the giftor would not have to pay gift taxes on that gift but would have to file a gift tax return.
Interesting... so he'd have to file a gift tax return at tax time? And is he going to get penalized?
There aren't any penalities to gifting money. As long as the gift is within the exclusions, then no taxes will be owed. If her dad pays for the reception hall, that wouldn't even be considered a gift if he paid it directly to the hall. It's when a sum of money is given to a person and that iniatites paperwork so the funds need to be accounted for.
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| Posted 8/15/07 9:45 AM |
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CaMacho
Sisters :)
Member since 7/06 15112 total posts
Name:
Jess
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Re: Giving/receiving $$$ and penalties...
Posted by shamrock124
The daughter would not be taxed as she is receiving the gift. The person giving the gift is responsible for any taxes that may be owed. I believe, althought I am not certain, the giftee may have to file a form with their taxes indicating the gift but not for the purpose of taxation.
I think this is what he was most worried about, he didn't want them to be penalized during tax time.
Thanks for all your help!
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| Posted 8/15/07 9:51 AM |
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LSP2005
Bunny kisses are so cute!
Member since 5/05 19461 total posts
Name:
L
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Re: Giving/receiving $$$ and penalties...
I don't remember the annual amount (I think it is around 11k) but if he has a wife both he and his wife could give 11k to each person before hitting the gift tax. So if he and his wife gave 11k each they can give 22k to the daughter and 22k to the her future husband for a total of 44k to the couple. If the man is single then he could only give 22k to the daughter and son in law. HTH
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| Posted 8/15/07 9:56 AM |
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hazeleyes33
LIF Adult
Member since 5/05 13060 total posts
Name:
Ginger
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Re: Giving/receiving $$$ and penalties...
The most allowed to be given before getting taxed is $11,000 per person.
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| Posted 8/15/07 10:57 AM |
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donegal419
St. Gerard, pray for us.
Member since 7/07 7650 total posts
Name:
K
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Re: Giving/receiving $$$ and penalties...
i don't know much about the tax laws, but he could defintiely pay a credit card from his checking account and it doesn't matter.
I had a large bill that i needed to charge a few years ago... my mom's card had a 0% APR so we charged it on her card. i paid it off using my checks... it was never a problem
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| Posted 8/15/07 11:05 AM |
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donegal419
St. Gerard, pray for us.
Member since 7/07 7650 total posts
Name:
K
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Re: Giving/receiving $$$ and penalties...
Perhaps he can pay the actual vendors for them if he's worried about her being taxed?
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| Posted 8/15/07 11:06 AM |
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Michelle
My Little Yankee Fans
Member since 1/06 4018 total posts
Name:
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Re: Giving/receiving $$$ and penalties...
It is 11,000 per year per person, so for example my Mom & Dad can give me and DH, 44,000 each year with no tax consequences.
Anything above that eats into the gift givers exclusion when they die. A form needs to be filed with the gift givers tax return but no tax is due.
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| Posted 8/15/07 12:02 PM |
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CaMacho
Sisters :)
Member since 7/06 15112 total posts
Name:
Jess
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Re: Giving/receiving $$$ and penalties...
Posted by donegal419
Perhaps he can pay the actual vendors for them if he's worried about her being taxed?
That's what I said, but he said they also have other debt he wants to pay off so he wanted to give them a lump sum.
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| Posted 8/15/07 12:17 PM |
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