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I understand that the Gift Tax is capped at $13,000.00 this year.
I've been seeking info online about who pays tax on the amount given to children. Some sites state that the giver does not pay tax. Of course the children don't pay tax, but I can't imagine that the giver doesn't owe the IRS or their state for the amount gifted.
I understand that the Gift Tax is capped at $13,000.00 this year.
I've been seeking info online about who pays tax on the amount given to children. Some sites state that the giver does not pay tax. Of course the children don't pay tax, but I can't imagine that the giver doesn't owe the IRS or their state for the amount gifted.
Can anyone clear this up for me?
Thanks!
The gift giver is liable for the tax. However, this is a 'honest' tax as failure to pay is very difficult to track if given to a family member. In addition, a husband & wife can give $26k to an individual before paying the tax. Another $26k to a different individual. And another $26k etc. So LSS, a lot of money can transfer hands without being required to pay any tax. Of course, the receiver would have to explain a hugh bank deposit to the bank. Money laundering questions and potential reporting to Homeland Security.
It's my understanding that there is now also a "lifetime exclusion" amount so to speak, before you have to actually pay taxes on a gift. You should probably discuss this with an accountant or the IRS. I'm far from a tax expert, but it's my understanding that yes, you can give a certain amount per year to individuals, but I think also now you have to REPORT any amount given beyond that, but I think now you are not actually taxed (though again, you do have to report) until or unless the amount you have given over a lifetime gets VERY large, like up to a million dollars.
Your best option, again, would be to talk to a tax expert about current rules, but just aware I think you can actually give a lifetime amount of quite a bit before having to actually pay a tax. But you must report it even though it would not be taxed. The "reporting" part, I understand, relates to the fact that you have to be aware of how much you have given "in a lifetime" for your "lifetime" amount. Most people would fall way under this lifetime amount.
Again, this is just my understanding from what I've researched myself. You should really confirm it with a tax expert. Sometimes the "web" can be confusing or incomplete information.
I thought the whole purpose of 'the gift' is that you can transfer a block of money to another person without taxes.
You can, up to $13k to any one individual per year. If married, then $26k to any one individual. And another tax free gift of $13k/$26k to another individual.
You can, up to $13k to any one individual per year. If married, then $26k to any one individual. And another tax free gift of $13k/$26k to another individual.
Beekeeper - Given the clarity of the previous comments, I am at lost what this question is asking.....
I could write an essay on the kaykay comments as some of the points are incorrect, but I don't have the energy tonite. Besides, taht topic is fairly cut and dry and thus can be easily Googled.
I took $13,000.00 and gave it to my daughter in 2010. Now my tay preparer says I must pay taxes on the amount I withdrew. Is that correct and what would my taxes (California) be for the $13,000.00
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