Getting paid by parent

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Just have them give you money. Why would you take payment from a parent to help?

We already get the max money as a gift so I did not know I could take more than that legally and without paying taxes. I had heard of the $13M exclusion but then I wonder why would they have the annual limit of $19K? It did not make sense to me.

My understanding was that my parent would have to pay tax on anything over the $19K they already give me.

The sibling also gets the max gift. Parent wanted to compensate me.

OP

The $19k per year is in addition to the $14MM exclusion…so you can provide that to anyone without requiring you file a form with the IRS detailing the gift.

But your parent could hand you $14MM and it would be exempt to you from federal income tax…but your parent would have to let the IRS know they reached the max so that any additional
Dollar given to you would be taxable.

Why is there an annual cap then?

None of this post makes sense.

[Anonymous]

Anonymous wrote:An adult (anyone not still perusing their education) getting 18K a year from their parents every year is embarrassing. Stand on your own two feet OP. And everything doesn’t have to be transactional. It sounds like in a variety of ways you are already doing better than your siblings. Count your blessings and stop trying to extract money from family.

So you didn't read anything the OP wrote.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Just have them give you money. Why would you take payment from a parent to help?

We already get the max money as a gift so I did not know I could take more than that legally and without paying taxes. I had heard of the $13M exclusion but then I wonder why would they have the annual limit of $19K? It did not make sense to me.

My understanding was that my parent would have to pay tax on anything over the $19K they already give me.

The sibling also gets the max gift. Parent wanted to compensate me.

OP

The $19k per year is in addition to the $14MM exclusion…so you can provide that to anyone without requiring you file a form with the IRS detailing the gift.

But your parent could hand you $14MM and it would be exempt to you from federal income tax…but your parent would have to let the IRS know they reached the max so that any additional
Dollar given to you would be taxable.

Why is there an annual cap then?

None of this post makes sense.

The $14 M is a once in a lifetime gift. The annual gift is annual and excluded. Anything over the $14 M lifetime gift is taxed at the 50% estate tax upon death. You would need to pay income taxes on receiving it, but not estate taxes upon death on it.

For example someone leaves $20 M to 2 kids in will. They had been given $200,000 each in 2020. The estate tax would be applicable to $6,400,000 upon death, since $13.6 would be exempt. So the tax would be $3.2 Million.

[Anonymous]

Anonymous wrote:If there is any possibility that your parent will try to go on Medicaid in the next 2 years, any payments made to you may come under some additional scrutiny.

Isn't the Medicaid lookback period 5 years?

So if Mom transfers 19K to you and then runs out of money, and has to go into a nursing home, they will look back.

If they see a strange 19K transfer 3.5 years ago, and the nursing home is 9.5K per month, they will deny payment for 2 months, to account for the 19K.

Now whether you pay back the 19K at this point to cover the first 2 months, or they refuse entry, I'm not sure. But be aware financial gifts can become an issue if the giver doesn't have a lot of assets, and then relies on Medicaid within I believe 5 years.

[Anonymous]

Anonymous wrote:An adult (anyone not still perusing their education) getting 18K a year from their parents every year is embarrassing. Stand on your own two feet OP. And everything doesn’t have to be transactional. It sounds like in a variety of ways you are already doing better than your siblings. Count your blessings and stop trying to extract money from family.

You must not know much about estate planning because it's pretty normal to give cash gifts to reduce estate taxes if you have more than a certain amount of money.

If we don't take the cash gifts, then we'll just have to pay 40% to the IRS. What would be silly is not taking the money and then sending 40% to the IRS instead...But you do not understand this topic, so you would not know that.

OP

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Just have them give you money. Why would you take payment from a parent to help?

We already get the max money as a gift so I did not know I could take more than that legally and without paying taxes. I had heard of the $13M exclusion but then I wonder why would they have the annual limit of $19K? It did not make sense to me.

My understanding was that my parent would have to pay tax on anything over the $19K they already give me.

The sibling also gets the max gift. Parent wanted to compensate me.

OP

I’m honestly distressed by how many people on dcum seem to have enough money to give or receive the annual exemption but not enough brains to google this for two minutes. It’s not complicated. If you had an “understanding” that they would have to pay tax on gifts over the annual exemption, it’s because you never made the slightest effort to learn about it. Two minutes is generous. 30 seconds would do.

Of course, I googled it first and also talked with a financial advisor. An aspect of the topic was confusing to me, so I asked for help.

I could have a disability or brain fog for all you know and here you are insulting a stranger. Do you feel better about yourself now?

It still seems crazy to me one can take $13M over a lifetime. What's the point of the $19K annual limit if you can give $13M? The law is nuts.

OP

[Anonymous]

Anonymous wrote:What taxes?
How did this idea even pop into your head? How is it that you need to charge your parent at all? Not having money and some ridiculous idea of taxes are most likely connected. I didn't need money two months into getting a low paying job at 18.
The parent can hand you lots of cash and it's nobody's business. Who doesn't know it, is my question.
Glad you asked, but what else are you doing to yourself to complicate your life.

I don't know. But I hope you never have to care for two dying people like I did and do. Hope you feel good about your anger level.

OP

[Anonymous]

Anonymous wrote:If there is any possibility that your parent will try to go on Medicaid in the next 2 years, any payments made to you may come under some additional scrutiny.

Nope. They will outlive their money.

OP

[Anonymous]

Anonymous wrote:

Anonymous wrote:An adult (anyone not still perusing their education) getting 18K a year from their parents every year is embarrassing. Stand on your own two feet OP. And everything doesn’t have to be transactional. It sounds like in a variety of ways you are already doing better than your siblings. Count your blessings and stop trying to extract money from family.

No it is not. We gift our kids that (and will their spouses once they have them). Why? Because we will be impacted by the Cap on Estate transfers (yeah I know it's now $15M/person, and yes we will likely exceed that). So it's the best way to transfer wealth and avoid extra taxes. Also it helps our kids in their 20s and 30s much more than when they are 50+ and we are dead. It can (and will ) change the trajectory of their lives. Allow them to "work closer to their house", "take a less stressful job where they have more time with family", etc.

Exactly. Thank you. Finally, someone understands.

OP

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Just have them give you money. Why would you take payment from a parent to help?

We already get the max money as a gift so I did not know I could take more than that legally and without paying taxes. I had heard of the $13M exclusion but then I wonder why would they have the annual limit of $19K? It did not make sense to me.

My understanding was that my parent would have to pay tax on anything over the $19K they already give me.

The sibling also gets the max gift. Parent wanted to compensate me.

OP

The $19k per year is in addition to the $14MM exclusion…so you can provide that to anyone without requiring you file a form with the IRS detailing the gift.

But your parent could hand you $14MM and it would be exempt to you from federal income tax…but your parent would have to let the IRS know they reached the max so that any additional
Dollar given to you would be taxable.

Why is there an annual cap then?

None of this post makes sense.

Yes. Agreed. This is what confused me too.

OP

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Just have them give you money. Why would you take payment from a parent to help?

We already get the max money as a gift so I did not know I could take more than that legally and without paying taxes. I had heard of the $13M exclusion but then I wonder why would they have the annual limit of $19K? It did not make sense to me.

My understanding was that my parent would have to pay tax on anything over the $19K they already give me.

The sibling also gets the max gift. Parent wanted to compensate me.

OP

The $19k per year is in addition to the $14MM exclusion…so you can provide that to anyone without requiring you file a form with the IRS detailing the gift.

But your parent could hand you $14MM and it would be exempt to you from federal income tax…but your parent would have to let the IRS know they reached the max so that any additional
Dollar given to you would be taxable.

Why is there an annual cap then?

None of this post makes sense.

Yes. Agreed. This is what confused me too.

OP

There is no annual cap. There is an annual amount that you can gift your kid that is tax free in addition to the lifetime cap ($14MM or $15MM whatever it is in the new tax bill).

You can give $19K per year for 30 years and then $15MM in year 31 and no tax.

[Anonymous]

I think the $19k annual exemption is just because otherwise everyone would have to fill out a form 709 for every gift they give people. It would be such a pain and impossible to enforce. The idea wasn’t that all the rich parents will write $19k checks although that happens. It’s also so if they give someone $500 on their birthday or whatever it’s not under the table to not report it.

[Anonymous]

You do not need to pay taxes. Have them give you cash or pay some bills directly if you are that worried.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:Just have them give you money. Why would you take payment from a parent to help?

We already get the max money as a gift so I did not know I could take more than that legally and without paying taxes. I had heard of the $13M exclusion but then I wonder why would they have the annual limit of $19K? It did not make sense to me.

My understanding was that my parent would have to pay tax on anything over the $19K they already give me.

The sibling also gets the max gift. Parent wanted to compensate me.

OP

The $19k per year is in addition to the $14MM exclusion…so you can provide that to anyone without requiring you file a form with the IRS detailing the gift.

But your parent could hand you $14MM and it would be exempt to you from federal income tax…but your parent would have to let the IRS know they reached the max so that any additional
Dollar given to you would be taxable.

Why is there an annual cap then?

None of this post makes sense.

Yes. Agreed. This is what confused me too.

OP

There is no annual cap. There is an annual amount that you can gift your kid that is tax free in addition to the lifetime cap ($14MM or $15MM whatever it is in the new tax bill).

You can give $19K per year for 30 years and then $15MM in year 31 and no tax.

This one sentence has the most clarity of anything I have read. The online articles take five to ten paragraphs and are not nearly as clear in their writing. Thank you for this!

What you say is how I understood it yet I could not believe it was true and that I was understanding it correctly because it seems insane.

OP

[Anonymous]

Anonymous wrote:I think the $19k annual exemption is just because otherwise everyone would have to fill out a form 709 for every gift they give people. It would be such a pain and impossible to enforce. The idea wasn’t that all the rich parents will write $19k checks although that happens. It’s also so if they give someone $500 on their birthday or whatever it’s not under the table to not report it.

Gotcha, that makes sense then. Thanks!

OP