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Message
Best Approach to Accepting Large Cash Gift? What should I do with it?
Posted on 2/8/16 at 1:30 pm
Posted on 2/8/16 at 1:30 pm
A relative wants to give me a substantial amount of money (subtle brag, I know...), and I'm trying to figure out the best approach to accepting it so that I don't get taxed out the arse, which I'm already expecting to happen. I won't give an amount, but I will say it's not enough to pay off my house.
My second question impacts the first, because I assume how I plan to use the money can also affect how it is taxed. I have kids, so is there a way to accept the money and put a portion of it toward a college savings plan without taking a big hit on taxes when I accept it? What if I just have my relative deposit an amount directly to the college savings plan?
Is there a better investment I could make? Is it smart to just put it toward the principle on my house? The amount covers about 1/3 of my mortgage. Should I put it in a mutual fund or retirement account?
I know everyone has their own preferences on this stuff, and everyone's situation is different, but I'm just trying to get an idea of what my options are.
Thanks in advance for any input!
My second question impacts the first, because I assume how I plan to use the money can also affect how it is taxed. I have kids, so is there a way to accept the money and put a portion of it toward a college savings plan without taking a big hit on taxes when I accept it? What if I just have my relative deposit an amount directly to the college savings plan?
Is there a better investment I could make? Is it smart to just put it toward the principle on my house? The amount covers about 1/3 of my mortgage. Should I put it in a mutual fund or retirement account?
I know everyone has their own preferences on this stuff, and everyone's situation is different, but I'm just trying to get an idea of what my options are.
Thanks in advance for any input!
This post was edited on 2/8/16 at 1:42 pm
5
Posted on 2/8/16 at 1:34 pm to Green Grass Miracle
Have the relative and his/her spouse gift you 14k each every year (28k) until you reach the amount he/she wanted to give you. If you're married, have them give 14k each to your wife.
14k was this past year. Not sure how much it increased for inflation.
14k was this past year. Not sure how much it increased for inflation.
This post was edited on 2/8/16 at 1:37 pm
Posted on 2/8/16 at 1:35 pm to Green Grass Miracle
You are allowed to receive around $15,000 per year tax free I believe. So if its like $60,000 or so you can just ask him to gift a portion each year.
I'll let others chime in with better answers....
I'll let others chime in with better answers....
Posted on 2/8/16 at 1:38 pm to I Love Bama
Can the giver write off the gift on their taxes?
Posted on 2/8/16 at 1:40 pm to I Love Bama
Is $15K a LA state tax rule or fed rule?
This post was edited on 2/8/16 at 1:40 pm
Posted on 2/8/16 at 1:41 pm to Green Grass Miracle
quote:
Is $15K a LA state tax rule or fed rule?
Federal
Posted on 2/8/16 at 1:43 pm to Green Grass Miracle
quote:
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, $13,000 in 2009-2012 and $14,000 on or after January 1, 2013, the annual exclusion applies to each gift. The annual exclusion for 2014, 2015, and 2016 is $14,000.
LINK
Posted on 2/8/16 at 1:44 pm to Green Grass Miracle
Posted on 2/8/16 at 1:47 pm to I Love Bama
So could I technically get $14K and my wife get $14k in the same year and be exempt if we file taxes jointly?
Posted on 2/8/16 at 1:54 pm to Green Grass Miracle
For the money board there sure has been some poor answers so far.
First, you don't have to pay any taxes on any gift ever. Thats the relative's responsibility.
Second, the relative has something like a million dollar lifetime gift tax exemption. The 14k per year just doesn't count against that amount. May be 2 million now I'm not sure.
Eta, bottom line on taxes is u won't have to pay any taxes on amount and the relative won't have to pay any either unless the amount is over 14k and they have exhausted their 1-2mil lifetime exemption.
First, you don't have to pay any taxes on any gift ever. Thats the relative's responsibility.
Second, the relative has something like a million dollar lifetime gift tax exemption. The 14k per year just doesn't count against that amount. May be 2 million now I'm not sure.
Eta, bottom line on taxes is u won't have to pay any taxes on amount and the relative won't have to pay any either unless the amount is over 14k and they have exhausted their 1-2mil lifetime exemption.
This post was edited on 2/8/16 at 2:05 pm
Posted on 2/8/16 at 2:03 pm to Chuker
quote:
For the money board there sure has been some poor answers so far.
wat
quote:
First, you don't have to pay any taxes on any gift ever. Thats the relative's responsibility.
wat x2
quote:
Second, the relative has something like a million dollar lifetime gift tax exemption. The 14k per year doesn't count against that amount. May be 2 million now I'm not sure.
wat x3
Hope you're not a tax professional
Posted on 2/8/16 at 2:03 pm to Green Grass Miracle
quote:You wont get taxed....he will
and I'm trying to figure out the best approach to accepting it so that I don't get taxed out the arse
Posted on 2/8/16 at 2:04 pm to TheOcean
quote:He was right
wat x2
quote:He was wrong
wat x3
quote:I am
Hope you're not a tax professiona
Posted on 2/8/16 at 2:06 pm to Green Grass Miracle
quote:You can get 1 billion. He is the one paying the taxes. The gift giver pays the taxes
So could I technically get $14K and my wife get $14k in the same year and be exempt if we file taxes jointly?
Posted on 2/8/16 at 2:07 pm to lsupride87
quote:
He was right
You would also be incorrect. Don't feel like citing the code.
Posted on 2/8/16 at 2:08 pm to TheOcean
quote:You are wrong. 100%. The donor pays the tax. Please argue this with me
You would also be incorrect. Don't feel like citing the code.
quote:
The donor is generally responsible for paying the gift tax. Under special arrangements the donee may agree to pay the tax instead. Please visit with your tax professional if you are considering this type of arrangement.
IRS.GOV
LINK
This post was edited on 2/8/16 at 2:09 pm
Posted on 2/8/16 at 2:09 pm to lsupride87
So the donee is never forced to pay the tax? How much would you like to wager?
Posted on 2/8/16 at 2:10 pm to lsupride87
quote:GET YOU SOME. You are being a typical attorney though
The person who makes the gift is the one who is responsible for paying any gift tax that may be due and reporting the gift to the IRS on a gift tax return - IRS Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, and the applicable state gift tax return (if any).
Yall love to argue the tax code with CPAs 
Posted on 2/8/16 at 2:10 pm to lsupride87
quote:
First, you don't have to pay any taxes on any gift ever. Thats the relative's responsibility.
=/=
quote:
Under special arrangements the donee may agree to pay the tax instead.
Posted on 2/8/16 at 2:11 pm to TheOcean
quote:Nice crawfish
So the donee is never forced to pay the tax? How much would you like to wager?
The donor is the responsible party 100%. They can make arrangements for the donee to take the tax though yes. But 100% the code is clear, the tax is on the donor. You failed. Admit it like a man
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