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2012 gift tax question

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foots2012
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2012 gift tax question  Reply with quote  

Hi,

My inlaws gave my family a check for 60,000. I understand a person can gift another person up to 13K in 2012 without any tax implications. My question is can my inlaws give us one check for that 60K or do they have to give my wife, myself and my daughter separate checks? I thought it would be silly to have my father inlaw give each of us a check for 10K and then my mother inlaw give us three more checks for 10K each. That would be six different checks in the amount of 10K. Not sure how that works. Any info would be appreciated. Thank you
Post Sun Dec 30, 2012 9:28 pm
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oldguy
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We use the latter method - several smaller checks - just to be certain that our intent is clear. You never know - someone other than you may be trying to explain the intent to an auditior 3 or 4 years in the future. (But I don't really know, that is just what we do.) Very Happy
Post Sun Dec 30, 2012 10:40 pm
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foots2012
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yeah we've done the latter in the past as well. I already have the one check for 60K so was hoping can just deposit that one. They made a note in the description section. I did see that the gift split method can be used on one check. Basically a married couple can write a check to one person for 26K and it be split by both married parties (implied sort of thing). I have to think that one check is fine but would feel better knowing for sure. Thanks for the reply.
Post Sun Dec 30, 2012 10:55 pm
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coaster
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If it were me I'd do the separate checks.

The reason is that 'implied' can (and is) interpreted differently depending on the particular IRS agent who reviews the return if it's kicked out for human review. And since a computer can't 'imply' that may be one trigger that kicks it out.

~Tim~
Post Sun Dec 30, 2012 11:04 pm
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foots2012
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Thanks Tim,

One more question. Am I right in thinking if there is a problem on the IRS end it would be on the person(s) writing the check and not on the receivers end? My father inlaw is fine with me depositing the one check instead of writing several. I just want to make sure if I do that and there is an audit inquiry that it's on his plate and not mine (since he is aware of this situation and is fine with me going the one check route). He claims he looked into it and wants to go this way. Am I responsibility free either way?

Thanks
Post Mon Dec 31, 2012 12:26 am
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coaster
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Yes, that's correct, it's the giver of the gift who's responsible for filing gift tax returns (see IRS site re: Pub 950 and Form 709); however what's not clear is whether or not the recipient of the gift is liable to pay *income tax* on any amount that exceeds the excluded amount. The IRS specifically says that gift income is not taxable income, but when they're talking about gift income, they're talking about the income given as a gift and presumable not in excess of the excludable amount, as the way I read it.

My best guess is that any amount in excess of the excludable amount *will* be seen as taxable income. And if I were an IRS auditor, that's probably the way I'd see one check deposited in one individual's account.

My own reading of the split-check parts of the instructions seems to refer to the case of a person and his/her spouse combining their exclusions to be given to one recipient; you're talking a two-way split; splitting on both ends.

You may want to consult a tax professional..... Shocked

~Tim~
Post Mon Dec 31, 2012 1:03 am
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littleroc02us
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Well, this is an interesting question because just this Christmas my father and mother in law gave my wife and I two seperate checks of 13k each. According to the IRS that is a non taxable event. The gifter needs to fill out a form to specify the gift, but it isn't taxable. If someone give you a gift larger then that the gifter will be taxed.

Risk comes from not knowing what you're doing. (Warren Buffet)
Post Mon Dec 31, 2012 2:58 am
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coaster
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quote:
Originally posted by littleroc02us
If someone give you a gift larger then that the gifter will be taxed.

Yes, but what's puzzling me is if the gift is larger than the allowed amount, is the excess taxable as income to the recipient? Any insights?

~Tim~
Post Mon Dec 31, 2012 7:27 am
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foots2012
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Thanks for the replies. It's puzzling to me why all these separate checks need to be written out. I mean why can't they just specify in the memo section of the check that the intent is for each party of the family, in our case me, my wife and daughter, is to receive 20K each. The 20K would be 10K each from my faither in law and mother inlaw. Then if they have an audit issue they have the copy of the cleared check with the inent implied. Then again we are dealing with the IRS.
Post Mon Dec 31, 2012 12:27 pm
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littleroc02us
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quote:
Originally posted by coaster
quote:
Originally posted by littleroc02us
If someone give you a gift larger then that the gifter will be taxed.

Yes, but what's puzzling me is if the gift is larger than the allowed amount, is the excess taxable as income to the recipient? Any insights?


According to the IRS' website it states this:

Who pays the gift tax?
The donor is generally responsible for paying the gift tax. Under special arrangements the donee may agree to pay the tax instead. Please visit with your tax professional if you are considering this type of arrangement.

*So I would take that as the gifter is going to be taxed, not the recipient.

Risk comes from not knowing what you're doing. (Warren Buffet)
Post Mon Dec 31, 2012 2:37 pm
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littleroc02us
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quote:
Originally posted by foots2012
Thanks for the replies. It's puzzling to me why all these separate checks need to be written out. I mean why can't they just specify in the memo section of the check that the intent is for each party of the family, in our case me, my wife and daughter, is to receive 20K each. The 20K would be 10K each from my faither in law and mother inlaw. Then if they have an audit issue they have the copy of the cleared check with the inent implied. Then again we are dealing with the IRS.


Not sure how that would work, but I'm assuming it would be determined on how the gifter fills out forms 709 and 590. My parents hand out checks every year for Christmas to our family usually for 1k each so each check is seperate but well below the gift tax max so they don't run into these problems.

Risk comes from not knowing what you're doing. (Warren Buffet)
Post Mon Dec 31, 2012 2:39 pm
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coaster
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I think it's obvious going the separate checks is the easiest way out ....

.... but what sane person wants to irritate their father-in-law?? Laughing

~Tim~
Post Mon Dec 31, 2012 4:26 pm
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Bradford
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What are the UK tax laws on severance pay and lieu of notice in a redundancy situation?
Post Fri Mar 13, 2015 6:19 pm
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