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re: gift tax question
Posted on 8/1/13 at 2:06 pm to LNCHBOX
Posted on 8/1/13 at 2:06 pm to LNCHBOX
This definitely could work, if you included your spouse in the gift. The father could gift $14k to husband, $14k to wife. (but it would be a gift to both, not just him) And it has already been mentioned, but mother could also gift $14k to each person.
1
Posted on 8/1/13 at 2:08 pm to Bear Is Dead
quote:
you have to actually charge interest
Is Toyota financial paying tax on the 0% loan they just gave me?
Posted on 8/1/13 at 2:08 pm to Bear Is Dead
quote:
This definitely could work, if you included your spouse in the gift. The father could gift $14k to husband, $14k to wife. (but it would be a gift to both, not just him) And it has already been mentioned, but mother could also gift $14k to each person.
Why does it have to be a gift if it's an account everyone has access to?
Posted on 8/1/13 at 2:10 pm to LNCHBOX
quote:
Is Toyota financial paying tax on the 0% loan they just gave me?
Go read any estate/gift tax textbook. If I loan you money and don't charge you interest, I have gifted you the amount in interest that should've been paid (FMV). I don't know how car financing works, im sure they have lawyers that do all that for them.
Posted on 8/1/13 at 2:13 pm to LNCHBOX
quote:
Why does it have to be a gift if it's an account everyone has access to?
Im not understanding your question.
Here is the rule as taught by my estate prof: Anybody can gift the annual exclusion amount to as many chinamen as there are in china.
But really, any person can gift up to $14k to an unlimited number of donees.
Posted on 8/1/13 at 2:15 pm to Bear Is Dead
quote:
Im not understanding your question.
My question is that if the OP's dad makes a joint bank account with him, and then deposits $20k into the account, would that be considered gifting it. I don't think it would, since it would be coming from an account with the dad's name on it, but I'm sure the gov't would like to tax it anyway.
Posted on 8/1/13 at 2:19 pm to Bear Is Dead
quote:
Second, you would have to report it as a debt when you applied for a mortgage or borrow money, which is dumb because it would throw your income/debt ratio out of whack, for no good reason.
You are by the books. If no one, ie. your parents, aren't showing this loan on a personal financial statement or any other government submitted documents with their sons social security number on it, there is NO record of this.
quote:
And the IRS can commonly sniff this out if you were ever audited.
First the chances of getting audited for your personal income tax return is slim unless you give them a reason to look.
Second 80% of audits are now computer/letter audits. Meaning all they do is match social security/EIN numbers with what you have on your return and what was submitted by other parties in that same number. If no one submitts the loan there is no record of it.
And that 80% is going to climb higher with all the current problems the IRS is having and a reduction in manpower.
Is there a risk doing it this way, yes. But I belive it is minute.
Posted on 8/1/13 at 2:57 pm to PurpleAndGold86
Estate/gift tax work together...assuming yu haven't had any gifts before, you can give up to $5.25 mil this year with no tax implications other than having to report it.
People get hung up on the annual gift tax number, but that number really doesn't matter. You can gift more than 14k...way more. People get "worried" about going over 14k in a year, and there's no reason to...it doesn't cause any tax liability if u go over. It's perfectly fine to give more than 14k in a year, you just have to report it.
People get hung up on the annual gift tax number, but that number really doesn't matter. You can gift more than 14k...way more. People get "worried" about going over 14k in a year, and there's no reason to...it doesn't cause any tax liability if u go over. It's perfectly fine to give more than 14k in a year, you just have to report it.
This post was edited on 8/1/13 at 3:04 pm
Posted on 8/1/13 at 2:58 pm to Bear Is Dead
quote:I don't think you understand the law with respect to below market interest rate loans. The gift is usually limited to the amount of interest that is less than the applicable federal rate. So the gift will be at most a small fraction of the $20K loan.
First, you have to actually charge interest, and the debtor must pay on it, or else it is a 20k gift. Second, you would have to report it as a debt when you applied for a mortgage or borrow money, which is dumb because it would throw your income/debt ratio out of whack, for no good reason. And the IRS can commonly sniff this out if you were ever audited.
Posted on 8/1/13 at 3:12 pm to Poodlebrain
quote:
The gift is usually limited to the amount of interest that is less than the applicable federal rate. So the gift will be at most a small fraction of the $20K loan.
You are right, but why go through all that when all you have to do is cut a $14k check, then a $6k check? That's it, then you are done.
Additionally, if you were ever audited, the IRS would want to know what the hell this loan was for. And the major point that you missed is that he still has to pay it back!
This post was edited on 8/1/13 at 3:16 pm
Posted on 8/1/13 at 3:14 pm to JPLSU1981
quote:
People get "worried" about going over 14k in a year, and there's no reason to...
It is a useful tool to estate plan. You can actually gift stock in a closely help corporation at a discounted rate (for various things), so over time, you can gift the stock to the kids and not leave your children with a potential tax burden.
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