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Thanks smart money I am not sleeping at night. I am just a wreck over this whole thing. I guess I just could not figure out how the bank could find out we returned my parents money-I guess they could not?
No one is going to figure out you gave the money back to your parents and go after you. But I would suggest you buy your new house first, then start giving the money back to your parents afterwards. Otherwise you might have issues buying the new house and explaining the large withdrawals when you provide statements of your bank account to the new lender.
No need to give it to them in one big lump sum. Tell them how much you're going to give them, then provide it in small increments for tax reasons.
Thanks 39 I talked to an accountant this morning and she said as long as I am below the 52,000 limit there are no tax implications for returning the money to my parents
That may be fine for you, but you're not thinking about your parents' tax situation. It's likely if you exceed the $13k year limit, they will have to pay taxes on it. It may also disqualify them for programs they are currently receiving financial support by exceeding income or asset limits.
It's not all about "you" and your situation. What's the big hurry?
39 the gift amount is below the tax amount. They can gift me 52,000 and I can return it to them no problem. I won't be taxed and they won't be taxed. Each parent can give the child 26,000 and each parent can give the childs spouse 26,000.
39 the gift amount is below the tax amount. They can gift me 52,000 and I can return it to them no problem. I won't be taxed and they won't be taxed. Each parent can give the child 26,000 and each parent can give the childs spouse 26,000.
For 2013, the amount has increased from $13,000 per giver/per person to $14,000/per annum.
See excerpt from irs.gov below:
How many annual exclusions are available? The annual exclusion applies to gifts to each donee. In other words, if you give each of your children $11,000 in 2002-2005, $12,000 in 2006-2008, $13,000 in 2009-2012 and $14,000 on or after January 1, 2013, the annual exclusion applies to each gift.
What if my spouse and I want to give away property that we own together? You are each entitled to the annual exclusion amount on the gift. Together, you can give $22,000 to each donee (2002-2005) or $24,000 (2006-2008), $26,000 (2009-2012) and $28,000 on or after January 1, 2013.
BTW, in this country, the recipient of a gift is not taxed.
What is happening with the OP, the mother is giving him 13K and the father is giving him 13K. The mother is giving the child's spouse 13K.....then the father is giving the child 13K, and then, the father is giving the spouse 13K.
What is happening with the OP, the mother is giving him 13K and the father is giving him 13K. The mother is giving the child's spouse 13K.....then the father is giving the child 13K, and then, the father is giving the spouse 13K.
We did this... almost exactly. Our downpayment on our home was borrowed from my parents. They signed a document stating that it was a gift to satisfy the mortgage company (because, of course, downpayments can't be borrowed). When we got the proceeds from our other house that we sold, we paid them back in one lump sum.
No one cares...truthfully. The amount you are talking about is so low (in the grand scheme of things) that they do not check up on it. The issue you will have is when it comes time to do your taxes. All the proceeds from the sale of your house will be a wash because you reinvested in real estate within a certain time from EXCEPT the amount you returned to your parents. That will be counted as part of your income. You may want to adjust your withholdings now to compensate for that.
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