I need help finding a document, or a government page about

TheSiege

Diamond Member
Jun 5, 2004
3,918
14
81
every 6 months this chick at works get 12k from her grandpa.
he writes a check to her and she deposits it into her bank account

no trust fund, no bond, straight cash

now i told her that she needs to claim that on her taxes
she thinks she doesnt because he has already payed taxes on it and its a gift

now i know she is dumb, i know i am right, i just need to prove it

any ideas?
 

FoBoT

No Lifer
Apr 30, 2001
63,084
14
81
fobot.com
irs.gov

http://www.irs.gov/businesses/small/article/0,,id=108139,00.html

Q: What can be excluded from gifts?

The general rule is that any gift is a taxable gift. However, there are many exceptions to this rule. Generally, the following gifts are not taxable gifts.

1. Gifts that are not more than the annual exclusion for the calendar year.
2. Tuition or medical expenses you pay for someone (the educational and medical exclusions).
3. Gifts to your spouse.
4. Gifts to a political organization for its use.

In addition to this, gifts to qualifying charities are deductible from the value of the gift(s) made.

Q: 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, 2003, 2004 or 2005 and $12,000 in 2006, the annual exclusion applies to each gift.
give the chick the link to this thread so she can post something about you calling her dumb
 

Shadowknight

Diamond Member
May 4, 2001
3,959
3
81
WRONG! If he's giving it to her as a gift, HE pays taxes on it. You can give $11,000 in value every year in a gift PER PERSON free of taxes. This is to cover birthday gifts, money, anything. After that, you pay a gift tax. So out of the $24,000 he gives her every year, he needs to report on his tax return the $12,000 beyond the initial $12,000.
 

TheSiege

Diamond Member
Jun 5, 2004
3,918
14
81
Originally posted by: Shadowknight
WRONG! If he's giving it to her as a gift, HE pays taxes on it. You can give $11,000 in value every year in a gift PER PERSON free of taxes. This is to cover birthday gifts, money, anything. After that, you pay a gift tax. So out of the $24,000 he gives her every year, he needs to report on his tax return the $12,000 beyond the initial $12,000.

but what does she need to claim?
wouldnt this be the same as paying someone under the table as long as it is less then 12k? and still be legal?
 

Shadowknight

Diamond Member
May 4, 2001
3,959
3
81
Originally posted by: TheSiege
ok so i get most of it, but what does line 1. mean?

All it means is that gifts totaling the first $12,000 aren't getting taxed, but anything beyond that is.
 

Shadowknight

Diamond Member
May 4, 2001
3,959
3
81
Originally posted by: TheSiege
Originally posted by: Shadowknight
WRONG! If he's giving it to her as a gift, HE pays taxes on it. You can give $11,000 in value every year in a gift PER PERSON free of taxes. This is to cover birthday gifts, money, anything. After that, you pay a gift tax. So out of the $24,000 he gives her every year, he needs to report on his tax return the $12,000 beyond the initial $12,000.

but what does she need to claim?

Nothing.
 

FoBoT

No Lifer
Apr 30, 2001
63,084
14
81
fobot.com
the part of the money he gives her that goes to her tuition is excluded and up to $12K per year for any use is excluded

but she should be consulting a tax professional and if she is and you are not a tax professional, then don't call her dumb
 

SmoochyTX

Lifer
Apr 19, 2003
13,615
0
0
Originally posted by: TheSiege
Originally posted by: SmoochyTX
Why do you need to have your nose stuck in her business?

why do you have to thread crap?
You're one of those people that others need to keep at arm's length and not say a word to other than 'Good morning' and 'Goodbye'.

Let her manage her own financials. It's none of your business.
 

TheSiege

Diamond Member
Jun 5, 2004
3,918
14
81
Originally posted by: FoBoT
the part of the money he gives her that goes to her tuition is excluded and up to $12K per year for any use is excluded

but she should be consulting a tax professional and if she is and you are not a tax professional, then don't call her dumb

she is dumb regardless of this issue
 

TheSiege

Diamond Member
Jun 5, 2004
3,918
14
81
so i can have some guy work on my house and pay him up $11,999.99 and call it a gift and it would be legal?

oh yeah, he also pays ~11k a year for her schooling
 

FoBoT

No Lifer
Apr 30, 2001
63,084
14
81
fobot.com
no, that isn't a gift

The gift tax is a tax on the transfer of property by one individual to another while receiving nothing, or less than full value, in return. The tax applies whether the donor intends the transfer to be a gift or not.
 

FoBoT

No Lifer
Apr 30, 2001
63,084
14
81
fobot.com
if you can get a copy of her tax returns and a copy of the bank records showing all these $ transfers, get them to the IRS and they can audit her

that'll show her
 

TheSiege

Diamond Member
Jun 5, 2004
3,918
14
81
Originally posted by: FoBoT
if you can get a copy of her tax returns and a copy of the bank records showing all these $ transfers, get them to the IRS and they can audit her

that'll show her

thats not my intention, i just want her to understand that with that amount of money she needs to claiming it on her taxes
 

TheSiege

Diamond Member
Jun 5, 2004
3,918
14
81
Originally posted by: FoBoT
no, that isn't a gift

The gift tax is a tax on the transfer of property by one individual to another while receiving nothing, or less than full value, in return. The tax applies whether the donor intends the transfer to be a gift or not.

well if i deem the work done on my house to be 12k
giving him $11,999.99 would be less then full value and would qualify as a gift then?
 

FoBoT

No Lifer
Apr 30, 2001
63,084
14
81
fobot.com
she can read pub. 525 Taxable and Nontaxable Income
http://www.irs.gov/publications/p525/index.html
Gifts and inheritances. Generally, property you receive as a gift, bequest, or inheritance is not included in your income. However, if property you receive this way later produces income such as interest, dividends, or rents, that income is taxable to you. If property is given to a trust and the income from it is paid, credited, or distributed to you, that income is also taxable to you. If the gift, bequest, or inheritance is the income from the property, that income is taxable to you.
 

FoBoT

No Lifer
Apr 30, 2001
63,084
14
81
fobot.com
her grandpa should be the one consulting an accountant, if he did this right, like maybe with a 529 plan or something, the whole thing could probably be done legit for both of them

there is a good chance both her and her grandpa are not using an accountant/tax professional and they both probably have faults in their tax returns


<shrugs>

if you can get copies of their returns, post them here and we can get CPA or eaglekeeper to review them
 

FoBoT

No Lifer
Apr 30, 2001
63,084
14
81
fobot.com
Originally posted by: TheSiege

well if i deem the work done on my house to be 12k
giving him $11,999.99 would be less then full value and would qualify as a gift then?

read the part on fair market value, YOU don't get to decide the value of the work, the IRS has rules that you have to follow