recieved $25,000 personal check from my brothers wife...

[Young Grasshopper]

my brother passed away last september due to an illness(Castleman's disease). he left everything on his wife's name(including the house he owns), which i had no problem with. i wasn't sure at the time if she recieved any kind of life insurance/401k earnings he might have had, we didn't care if he has lots of $$$ or not as long as she was financially stable.


my other brother stopped by yesterday with a personal check written to me(by her) for $25,000. i have never deposited a check this large and wanted to know if i will need to pay taxes on it? what's the process for depositing a check this large anyway? i still havent done anything with it as we all plan on discussing this sometime next month. im in calfornia btw

thanks

 

[rudeguy]

I have no intelligent input but I would like to say that I'm very sorry for your loss.

 

[arcenite]

It's just like any other check, it'll just take longer to clear. Although I seem to recall there is a special number where a bank is supposed to contact the IRS, but if you wait a day that wont matter anyway.

 

[GodisanAtheist]

Go to your bank and ask them instead of trusting something like this to atot.

 

[razor2025]

Ask your late brother's wife if the check has cleared the estate. Better yet, ask who's the executor(or lawyer) for his estate and ask that question to that person directly. That person should be able to tell you the tax situation.

 

[kami333]

At least for federal taxes the giver is usually the one responsible for any taxes.

 

[Fern]

-snip-
wanted to know if i will need to pay taxes on it?

I'm a tax CPA. No, you won't owe any taxes on it. You do NOT to report it etc.

Bank will probably make you wait a few days for it to clear before you can withdraw.

Fern

 

[nutxo]

It's just like any other check, it'll just take longer to clear. Although I seem to recall there is a special number where a bank is supposed to contact the IRS, but if you wait a day that wont matter anyway.

Its a check, not cash.

Deposit it like any other check and yes its taxable.

 

[Capt Caveman]

Gift Tax - I believe she'll end-up having to pay a tax on gifts over $10k.

 

[Cattlegod]

Ive heard that family gifts over 10k are taxed. Never researched myself though.

 

[somethingsketchy]

Unless I am mistaken, there's a "limit" before the IRS is usually called to verify the check is legitimate.

As long as the funds are there to cover the check, and the bank okay's the check, you'll be fine. Though you'll have to pay some sort of tax for the amount (whetever it is an inheritance tax or not, that'll depend on your state tax laws).

 

[The_Dude8]

Gift Tax - I believe she'll end-up having to pay a tax on gifts over $10k.

could she writes him a few smaller checks amount to avoid paying the gift tax? ie like
2 x 9k checks, and one for 7k check.

 

[apac]

It's a "gift". No tax.

 

[Capt Caveman]

could she writes him a few smaller checks amount to avoid paying the gift tax? ie like
2 x 9k checks, and one for 7k check.

I believe it's a yearly total. I'm sure if the checks were in smaller amounts it would be less noticeable by the bank and IRS.

 

[Perknose]

Lol @ the trio all posting @ 8:36 EDT and how it all worked out.

 

[Ns1]

It's a "gift". No tax.

gift > 10k = tax (annual basis)

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, and $13,000 on or after January 1, 2009, 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 (effective on or after January 1, 2009).

http://www.irs.gov/businesses/small/article/0,,id=108139,00.html#5

 

[kami333]

Gift Tax - I believe she'll end-up having to pay a tax on gifts over $10k.

10k per year per giver (I think it's 13k this year?) exemption, but there's also a lifetime exemption of 1million (I think it's 5million this year?) that goes into effect once you go over the 10k, but it's not a huge deal unless you plan on leaving a large estate.

 

[SSSnail]

could she writes him a few smaller checks amount to avoid paying the gift tax? ie like
2 x 9k checks, and one for 7k check.

And raise a red flag on him for structured transactions? Just deposit the damn check, it's not that much.

 

[dr150]

Since it's gifted to you, you don't have to pay inheritance tax. If any tax is due, it comes from her side.

 

[iGas]

It is vary from state to state, but estate/inheritance tax is paid by the estate (the giver).

First post 5 hours after PRK eyes surgery.

 

[zanejohnson]

And raise a red flag on him for structured transactions? Just deposit the damn check, it's not that much.

yeah he should pay the taxes on it..

sad though, that probably 90 percent in this case wouldn't.

 

[kranky]

It's an ANNUAL gift tax exclusion - multiple small gifts count towards the $13,000 limit. And if a giver exceeds that, he can count it against the lifetime gift tax exclusion of $5 million (or choose to pay the gift tax).

I never heard of using the IRS to verify if a check is legitimate.

 

[sactoking]

You can aggregate up to 5 years worth of gift tax exemptions. $25000 to you tax-free.

 

[Patranus]

Government - Taxing you after you die.

 

[Squisher]

It's an ANNUAL gift tax exclusion - multiple small gifts count towards the $13,000 limit. And if a giver exceeds that, he can count it against the lifetime gift tax exclusion of $5 million (or choose to pay the gift tax).

I never heard of using the IRS to verify if a check is legitimate.

This, most people aren't aware of the lifetime exclusion.