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I spoke with my lender and they gave me a letter that my parents have to sign noting that the money is just a gift and there is no repayment expected or implied. They also need to see copies of the check(s) and see them being deposited into our account.
I read online that if the money has been sitting in your bank account for 3 months it's considered "seasoned" and not subject to so much scrutiny.
I spoke with my lender and they gave me a letter that my parents have to sign noting that the money is just a gift and there is no repayment expected or implied. They also need to see copies of the check(s) and see them being deposited into our account.
I read online that if the money has been sitting in your bank account for 3 months it's considered "seasoned" and not subject to so much scrutiny.
So either have the money moved 3 months in advance or call it a gift
I am in the process of buying a home and my parents wish to give me and my wife money to increase our down payment to hit 20%. I've done some reading online and am unclear how it would work if the money is not a gift, but an interest free loan. On the IRS website, the max a gift (without receiving anything in return) can be per person is $14,000 a calendar year. So my wife and I could receive $28,000 this year without my parents having to worry about a gift tax. However, the money will be paid back and I am unclear as to how that would work from a tax perspective for both me and my parents.
Has anyone else gone through a similar situation?
I have mentioned this before,the max is $10,000 for no IRS reporting.
My brother and wife gave us $10,000 each.
A member of the senate had to resign and is facing federal charges for trying to skirt this law.
I have mentioned this before,the max is $10,000 for no IRS reporting.
My brother and wife gave us $10,000 each.
A member of the senate had to resign and is facing federal charges for trying to skirt this law.
It was $10,000 prior to 2004. It was $11,000 in 2004-05, $12,000 in 2006-08, and $13,000 in 2009-12. It became $14,000 in 2013 and is still there because we haven't had enough inflation since to cause it to kick up another notch. Maybe next year, maybe not.
I am in the process of buying a home and my parents wish to give me and my wife money to increase our down payment to hit 20%. I've done some reading online and am unclear how it would work if the money is not a gift, but an interest free loan. On the IRS website, the max a gift (without receiving anything in return) can be per person is $14,000 a calendar year. So my wife and I could receive $28,000 this year without my parents having to worry about a gift tax. However, the money will be paid back and I am unclear as to how that would work from a tax perspective for both me and my parents.
Has anyone else gone through a similar situation?
To add on to what others have said:
As noted, it's $14,000 from one person to any other person, so you could receive 14K from your mom, 14K from your dad, and then your wife could receive 14K from your mom and 14K from your dad, for $56K total.
Having said that, a gift in excess of $56K will trigger the need to file a gift tax RETURN, but will almost certainly NOT result in any gift tax LIABILITY. In essence, any gifts in excess of the "annual exclusion amount" (the $14K per person to any other person per year) will be considered made from an individual's "lifetime exemption". Currently, that amount is $5.43 MILLION per person (and even better, it gets adjusted for inflation every year). So if your mom and dad gave you and your wife $100K total, 56K would be considered "annual exclusion gifts" and the other $44K "lifetime exemption" gifts (Assume $22K each from mom and dad), thus effectively lowering their remaining lifetime exemptions from $5,430,000 each to $5,408,000 each.
This is important to the extent that it impacts estate taxation. When an individual dies, their estate is subject to federal estate tax. However, if one's net worth is below $5.43 million, there is no estate tax due (yes, that's the lifetime exemption). Gifts made during lifetime in excess of the annual exclusions "use up" some of that lifetime exemption. So if your parents made those gifts to you, and then they both died before the end of the year (I apologize for killing off your parents), then their combined lifetime exemption would be "only" $10,816,000 instead of $10,860,000.
I'm going to go out on a limb here and assume your parents do not have a combined net worth north of $10 million or even close. So the short answer is that even if they gave you guys more than $56,000, all they'll have to do is file a return and they will never owe any gift tax.
If your parents are worth over $10 mil, then they should already have spoken with a good estate planner and you shouldn't be reading about this stuff over the intermawebz.
(Yes, there's some details I'm leaving out and all, but that's a succinct summary of the issues and it's about 95% accurate. The bits that are slightly off shouldn't impact the result unless, again, your parents are worth $10 mil or so).
Another question - what happens if my parents share a checking account? Will this create any problems if they gave us 3 gifts? The checks have both of their names on it.
Another question - what happens if my parents share a checking account? Will this create any problems if they gave us 3 gifts? The checks have both of their names on it.
No problem at all. They could give one check to you and your wife in the amount of $56,000, or multiple checks totaling $56,000 and there would be no issue.
Hi, I'm bringing this topic back up. I was searching for gift tax issue. From the above, I read that each parents can give me $14k per year without any tax issue. So, let's say I have my mom, my father, my in-laws (mom and dad), I can receive $56,000 for myself as gift? and my wife can also receive the same amount as gift?
How about from my brother and sister? Will it count as gift if they give me money?
fyi, they are all living overseas and are not US citizens. Not sure if this matters.
Hi, I'm bringing this topic back up. I was searching for gift tax issue. From the above, I read that each parents can give me $14k per year without any tax issue. So, let's say I have my mom, my father, my in-laws (mom and dad), I can receive $56,000 for myself as gift? and my wife can also receive the same amount as gift?
How about from my brother and sister? Will it count as gift if they give me money?
fyi, they are all living overseas and are not US citizens. Not sure if this matters.
Gift tax is a tax paid by the giver of a gift, not the recipient of the gift. It is assessed on US citizens and resident aliens. If your family members are neither US citizens nor resident aliens, they won't be paying US gift tax, nor will you as the recipient of those gifts.
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