Anonymous
Post 09/02/2022 10:42     Subject: gift tax?
Gift tax has to be the most wildly misunderstood thing on this board.
Anonymous
Post 09/02/2022 10:35     Subject: Re:gift tax?
Anonymous wrote:
Anonymous wrote:Is it "legal" to provide "expensive" music lessons for free to kids and the grandparents just write the music teacher a 15K yearly gift? What will happen if twenty grandparents, uncle or aunt of the kid does that, will it raise a red flag with the IRS? Moral issue aside, is it legal?


When a gift is payment for services it is not a gift but rather tax fraud.



Again, moral issue aside, how is it "tax fraud" if the grandparents are NOT the one receiving lessons?  The grandparents are NOT claiming the child as dependent.  They just give a 15K gift to the music teacher.  Is it legal?
Anonymous
Post 09/02/2022 10:25     Subject: Re:gift tax?
Anonymous wrote:Is it "legal" to provide "expensive" music lessons for free to kids and the grandparents just write the music teacher a 15K yearly gift? What will happen if twenty grandparents, uncle or aunt of the kid does that, will it raise a red flag with the IRS? Moral issue aside, is it legal?


When a gift is payment for services it is not a gift but rather tax fraud.
Anonymous
Post 09/02/2022 10:18     Subject: Re:gift tax?
Anonymous wrote:Is it "legal" to provide "expensive" music lessons for free to kids and the grandparents just write the music teacher a 15K yearly gift? What will happen if twenty grandparents, uncle or aunt of the kid does that, will it raise a red flag with the IRS? Moral issue aside, is it legal?


I know that a grandparent can pay for a child’s education without it being considered a gift if the money goes directly to the school. I’m not sure about music lessons. I’m sure the IRS website can bring clarity.
Anonymous
Post 09/02/2022 09:32     Subject: Re:gift tax?
Is it "legal" to provide "expensive" music lessons for free to kids and the grandparents just write the music teacher a 15K yearly gift? What will happen if twenty grandparents, uncle or aunt of the kid does that, will it raise a red flag with the IRS? Moral issue aside, is it legal?
Anonymous
Post 09/01/2022 17:36     Subject: Re:gift tax?
Anonymous wrote:
Anonymous wrote:I also have a question about gift tax.  Let say twenty different strangers each give me 15K/yr in gift tax for a total of 300K, do I have to pay tax on the 300K gift tax that I receive?


The recipient does not pay a gift tax, and in this case the givers would not either since they are below $16k[/quote]

you don't pay gift tax even if over 16k
Anonymous
Post 09/01/2022 17:33     Subject: Re:gift tax?
Anonymous wrote:I also have a question about gift tax.  Let say twenty different strangers each give me 15K/yr in gift tax for a total of 300K, do I have to pay tax on the 300K gift tax that I receive?


The recipient does not pay a gift tax, and in this case the givers would not either since they are below $16k
Anonymous
Post 09/01/2022 17:26     Subject: Re:gift tax?
Anonymous wrote:I also have a question about gift tax.  Let say twenty different strangers each give me 15K/yr in gift tax for a total of 300K, do I have to pay tax on the 300K gift tax that I receive?


If they were truly gifts then no but money from strangers is almost never considered a gift
Anonymous
Post 09/01/2022 17:14     Subject: Re:gift tax?
I also have a question about gift tax.  Let say twenty different strangers each give me 15K/yr in gift tax for a total of 300K, do I have to pay tax on the 300K gift tax that I receive?
Anonymous
Post 09/01/2022 17:02     Subject: Re:gift tax?
Anonymous wrote:Appropriating money given to the kids is essentially fraud under these circumstances since the gift to them is a fiction intended to circumvent IRS rules. Further, the kids would technically then be gifting money to you, potentially requiring associated record-keeping and filings. Be wary of proceeding in that direction.


I'd imagine most of the time grandparents are gifting money for down payments it is so the grandkids (in existence or potential) can have more space or go to better schools.
Anonymous
Post 09/01/2022 17:01     Subject: gift tax?
Anonymous wrote:Both of them can give both of you up to $16K before triggering the paperwork. So that's $64K. Depending on your purchasing horizon they could do that now and again in January for $128K.

But as pp said, they can give you more, they'll just have to file the appropriate paperwork.


We have done this for many years. Our accountant has to do "something" on our tax return but we certainly don't pay "gift tax". Life time max is 11-12 mil so most people don't have to worry about that.
Anonymous
Post 09/01/2022 16:55     Subject: gift tax?
Both of them can give both of you up to $16K before triggering the paperwork. So that's $64K. Depending on your purchasing horizon they could do that now and again in January for $128K.

But as pp said, they can give you more, they'll just have to file the appropriate paperwork.
Anonymous
Post 09/01/2022 16:18     Subject: Re:gift tax?
Appropriating money given to the kids is essentially fraud under these circumstances since the gift to them is a fiction intended to circumvent IRS rules. Further, the kids would technically then be gifting money to you, potentially requiring associated record-keeping and filings. Be wary of proceeding in that direction.
Anonymous
Post 09/01/2022 15:51     Subject: Re:gift tax?
They can gift you whatever they want. If the gift is over the annual limit ($16k?) they have to file a gift tax return but there is no tax due. Above and beyond annual gifts they can something like $11 million before a tax is due. Just Google lifetime exemptions and you will see what I’m talking about.
Anonymous
Post 09/01/2022 15:28     Subject: gift tax?
Our parents want to help us with a down payment for a home. Are they able to gift the maximum amount to each of us AND our 3 kids? If money is gifted to the children, are we able to use those funds towards our house?