Minimizing taxes when transferring money between parents and adult children

[Anonymous]

They can each give you $14k a year. They can pay your rent/lawyer directly/credit card/private school directly and it won't count toward the maximum.

[Anonymous]

Anonymous wrote:

Anonymous wrote:Wait...so when I was younger and my parents paid for private school, college and my masters...all those tuition costs will later be added up and count against the 5.45M estate tax exemption (11M couple) when my parents pass on? They've got a bunch of real estate and I think it'll be above the 11M threshold. Or are tuition costs exempt?

Oh, no! You may have to pay some taxes on your $11 million inheritance? Whatever will you do?! You'd better stop buying Starbucks now, OP, just to plan for it.

This is OP. I am not the poster talking about $11 million; that was someone else. My parents have nowhere even close to that amount! So I guess I had misunderstood the gift tax; I thought anything more than that per year was taxed. Thanks for setting me straight.

Would there be any tax advantage to getting a condo sale check made out to me versus to them? i am guessing not.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Wait...so when I was younger and my parents paid for private school, college and my masters...all those tuition costs will later be added up and count against the 5.45M estate tax exemption (11M couple) when my parents pass on? They've got a bunch of real estate and I think it'll be above the 11M threshold. Or are tuition costs exempt?

Oh, no! You may have to pay some taxes on your $11 million inheritance? Whatever will you do?! You'd better stop buying Starbucks now, OP, just to plan for it.

This is OP. I am not the poster talking about $11 million; that was someone else. My parents have nowhere even close to that amount! So I guess I had misunderstood the gift tax; I thought anything more than that per year was taxed. Thanks for setting me straight.

Would there be any tax advantage to getting a condo sale check made out to me versus to them? i am guessing not.

No. I also don't think you can sell real estate and have the check made out to someone not on the title.

[Anonymous]

Anonymous wrote:They can each give you $14k a year. They can pay your rent/lawyer directly/credit card/private school directly and it won't count toward the maximum.

Again they can give any amount they want. However once they have given more than 5.4 million away they will have to pay tax. Regardless the recipient doesn't pay tax.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Wait...so when I was younger and my parents paid for private school, college and my masters...all those tuition costs will later be added up and count against the 5.45M estate tax exemption (11M couple) when my parents pass on? They've got a bunch of real estate and I think it'll be above the 11M threshold. Or are tuition costs exempt?

Oh, no! You may have to pay some taxes on your $11 million inheritance? Whatever will you do?! You'd better stop buying Starbucks now, OP, just to plan for it.

This is OP. I am not the poster talking about $11 million; that was someone else. My parents have nowhere even close to that amount! So I guess I had misunderstood the gift tax; I thought anything more than that per year was taxed. Thanks for setting me straight.

Would there be any tax advantage to getting a condo sale check made out to me versus to them? i am guessing not.

Sorry, I meant PP, not OP.

[Anonymous]

Anonymous wrote:They can each give you $14k a year. They can pay your rent/lawyer directly/credit card/private school directly and it won't count toward the maximum.

If they pay your rent/lawyer/credit card it counts as a gift to you. there is an exception for private school. so for rent and all the other items added up, anything over $14k counts towards the maximum.

[Anonymous]

Anonymous wrote:

Anonymous wrote:They can each give you $14k a year. They can pay your rent/lawyer directly/credit card/private school directly and it won't count toward the maximum.

If they pay your rent/lawyer/credit card it counts as a gift to you. there is an exception for private school. so for rent and all the other items added up, anything over $14k counts towards the maximum.

Again doesn't matter until the gift gives 5.4 million away. $14K per year to each person can be excluded. But really the gifter can give anything they want. You don't pay any taxes regardless. Don't worry about the $14k.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:They can each give you $14k a year. They can pay your rent/lawyer directly/credit card/private school directly and it won't count toward the maximum.

If they pay your rent/lawyer/credit card it counts as a gift to you. there is an exception for private school. so for rent and all the other items added up, anything over $14k counts towards the maximum.

Again doesn't matter until the gift gives 5.4 million away. $14K per year to each person can be excluded. But really the gifter can give anything they want. You don't pay any taxes regardless. Don't worry about the $14k.

PP - thanks much! you should start a new thread on this... a lot of people (including myself) have a mental block on this "14k/year" rule. i had no idea about 5.4 mil limit.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:They can each give you $14k a year. They can pay your rent/lawyer directly/credit card/private school directly and it won't count toward the maximum.

If they pay your rent/lawyer/credit card it counts as a gift to you. there is an exception for private school. so for rent and all the other items added up, anything over $14k counts towards the maximum.

Again doesn't matter until the gift gives 5.4 million away. $14K per year to each person can be excluded. But really the gifter can give anything they want. You don't pay any taxes regardless. Don't worry about the $14k.

PP - thanks much! you should start a new thread on this... a lot of people (including myself) have a mental block on this "14k/year" rule. i had no idea about 5.4 mil limit.

Yeah it seriously doesn't matter unless you're concerned about estate taxes. The purpose of the gift tax limit is so that people with large estates can't just give it all away before they die to avoid estate taxes.

If you're a middle class or upper middle class American it probably doesn't matter.

I'm not sure why everyone is so focused on the 14k. Every once in a while there is an article about how it doesn't matter for most people but doesn't seem to gain a lot of attention.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:They can each give you $14k a year. They can pay your rent/lawyer directly/credit card/private school directly and it won't count toward the maximum.

If they pay your rent/lawyer/credit card it counts as a gift to you. there is an exception for private school. so for rent and all the other items added up, anything over $14k counts towards the maximum.

Again doesn't matter until the gift gives 5.4 million away. $14K per year to each person can be excluded. But really the gifter can give anything they want. You don't pay any taxes regardless. Don't worry about the $14k.

It is not taxable but it does matter - any gifts over $14k and you need to file form 709.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:They can each give you $14k a year. They can pay your rent/lawyer directly/credit card/private school directly and it won't count toward the maximum.

If they pay your rent/lawyer/credit card it counts as a gift to you. there is an exception for private school. so for rent and all the other items added up, anything over $14k counts towards the maximum.

Again doesn't matter until the gift gives 5.4 million away. $14K per year to each person can be excluded. But really the gifter can give anything they want. You don't pay any taxes regardless. Don't worry about the $14k.

PP - thanks much! you should start a new thread on this... a lot of people (including myself) have a mental block on this "14k/year" rule. i had no idea about 5.4 mil limit.

Yeah it seriously doesn't matter unless you're concerned about estate taxes. The purpose of the gift tax limit is so that people with large estates can't just give it all away before they die to avoid estate taxes.

If you're a middle class or upper middle class American it probably doesn't matter.

I'm not sure why everyone is so focused on the 14k. Every once in a while there is an article about how it doesn't matter for most people but doesn't seem to gain a lot of attention.

Probably the same people who don't want to make that extra $1,000 because it will put them in a higher tax bracket and they're so much better off not making that extra money!

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:They can each give you $14k a year. They can pay your rent/lawyer directly/credit card/private school directly and it won't count toward the maximum.

If they pay your rent/lawyer/credit card it counts as a gift to you. there is an exception for private school. so for rent and all the other items added up, anything over $14k counts towards the maximum.

Again doesn't matter until the gift gives 5.4 million away. $14K per year to each person can be excluded. But really the gifter can give anything they want. You don't pay any taxes regardless. Don't worry about the $14k.

It is not taxable but it does matter - any gifts over $14k and you need to file form 709.

The gift giver must file!!!! Not the recipient! Important distinction. So again - accept all the "gifts" you can get. It's really not your problem unless you're worried about your parents giving away so much and affecting their estate tax.

[Anonymous]

Anonymous wrote:No free advice for someone inheriting 11 million!

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Wait...so when I was younger and my parents paid for private school, college and my masters...all those tuition costs will later be added up and count against the 5.45M estate tax exemption (11M couple) when my parents pass on? They've got a bunch of real estate and I think it'll be above the 11M threshold. Or are tuition costs exempt?

Oh, no! You may have to pay some taxes on your $11 million inheritance? Whatever will you do?! You'd better stop buying Starbucks now, OP, just to plan for it.

This is OP. I am not the poster talking about $11 million; that was someone else. My parents have nowhere even close to that amount! So I guess I had misunderstood the gift tax; I thought anything more than that per year was taxed. Thanks for setting me straight.

Would there be any tax advantage to getting a condo sale check made out to me versus to them? i am guessing not.

Silly question, but if your parents have gifted you $14k and can gift you another $14k (as they each can give you that amount) don't they have an accountant or financial adviser that THEY can ask about this? Seems you finding out this info for them when they are giving such a large amount is weird. They need to know this stuff and not take the word of what you're learning off of an internet forum. Get some actual professional advice.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Wait...so when I was younger and my parents paid for private school, college and my masters...all those tuition costs will later be added up and count against the 5.45M estate tax exemption (11M couple) when my parents pass on? They've got a bunch of real estate and I think it'll be above the 11M threshold. Or are tuition costs exempt?

Oh, no! You may have to pay some taxes on your $11 million inheritance? Whatever will you do?! You'd better stop buying Starbucks now, OP, just to plan for it.

This is OP. I am not the poster talking about $11 million; that was someone else. My parents have nowhere even close to that amount! So I guess I had misunderstood the gift tax; I thought anything more than that per year was taxed. Thanks for setting me straight.

Would there be any tax advantage to getting a condo sale check made out to me versus to them? i am guessing not.

Silly question, but if your parents have gifted you $14k and can gift you another $14k (as they each can give you that amount) don't they have an accountant or financial adviser that THEY can ask about this? Seems you finding out this info for them when they are giving such a large amount is weird. They need to know this stuff and not take the word of what you're learning off of an internet forum. Get some actual professional advice.

$28k isn't a large amount of money.