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Thread: paying taxes on "gifts"?

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    Featured Member Lizette's Avatar
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    Default paying taxes on "gifts"?

    If someone buys me a dress or makes a car payment for me, must I pay taxes on that?

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    God/dess montythegeek's Avatar
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    Default Re: paying taxes on "gifts"?

    If it is a "gift-gift" No. And if someone gives you cash, you do not pay the gift tax, the giver does if it exceeds the maximum untaxed amount of (I believe 10,000 per year).

    If there is a quid-pro-quo exchange like "if I paint your house you will make my next 5 car payments" you are at serious risk of it being considered compensation and hence taxable. There is a grey area I am not well enough informed to discuss and would defer to Dan the accountant.

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    Default Re: paying taxes on "gifts"?

    I agree with Monty that 'gifts' involving one time events i.e. one new dress, or a few hundred dollars one time to bail you out on rent will probably not be questioned. However, so-called 'gifts' which are NOT one time events may very well be questioned, as the IRS can make the argument that these 'gifts' are in fact payments for services rendered. Things you need to be careful of are 'sugar daddy' so-called gifts i.e. the 'free' use of a car, the 'free' use of an apartment, 'free' use of a credit card in sugar daddy's name etc.

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    Member magenta's Avatar
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    Default Re: paying taxes on "gifts"?

    What do you mean strippers need to be cautious of sugar daddy gifts? How so?

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    Default Re: paying taxes on "gifts"?

    Gifts. Simple rule, there is no deduction available to the donor. There is no income for the recipient. If the gift is more than $10,000 per recipient, the donor has to file a gift tax return. If the donor seeks a deduction for the gift, then it must be to a 501(c)(3) organization. Unless the donee is a 501(c)(3) there is no need to file a report the gift on their income tax return, no matter how large.

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    God/dess Bella21's Avatar
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    Default Re: paying taxes on "gifts"?

    ^Unless the sugar daddy (or other sort of donor") gets audited... then you're fucked. I recently went through this with a sugar daddy. I dumped him in '07 and I wasn't sure if he was going to try to report what he gave me or not (he had written me some company checks). I didn't recieve a 1099 from him. I had to call him and ask him about it (they will get fined if they don't send you that info but try to claim you). He tried to pretend that he was doing me a favor by "eating that expense" and not sending that info in. I claimed it anyways but it was an unnecessary pain in the ass.
    If you think school is hard, try being stupid.

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    Banned Melonie's Avatar
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    Default Re: paying taxes on "gifts"?

    ^^^ I have heard of some cases where the IRS has interpreted 'gifts' form 'sugar daddies' as being payment for 'services rendered' ... i.e. they considered it to be taxable income.

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    God/dess Zofia's Avatar
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    Default Re: paying taxes on "gifts"?

    Quote Originally Posted by Bella21 View Post
    ^Unless the sugar daddy (or other sort of donor") gets audited... then you're fucked. I recently went through this with a sugar daddy. I dumped him in '07 and I wasn't sure if he was going to try to report what he gave me or not (he had written me some company checks). I didn't recieve a 1099 from him. I had to call him and ask him about it (they will get fined if they don't send you that info but try to claim you). He tried to pretend that he was doing me a favor by "eating that expense" and not sending that info in. I claimed it anyways but it was an unnecessary pain in the ass.
    It is only an audit issue if the donor claims the "gift" as a deduction. Then it is not a gift at all. However, if the donor does not seek to claim the gift as a deduction, then no problem, unless it is over $10,000. Then the donor has problems with failure to file, not the amount of the gift. There is no reason not to file, unless the donor does not want a spouse to know about his gifts. (That is another problem that is not really a dollar den issue at all.)

    Remember, you can give away as much as you want, in less than $10,000 per year chunks and pay no taxes ever. If you give away more than $10,000 per year, then it eats in to your lifetime estate and gift tax credit. It still takes a lot of sugar daddying to blow through all that. Of course, spouse or kids might take issue with the surgar daddy, but that's a family matter.

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    God/dess Zofia's Avatar
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    Default Re: paying taxes on "gifts"?

    Quote Originally Posted by Melonie View Post
    ^^^ I have heard of some cases where the IRS has interpreted 'gifts' form 'sugar daddies' as being payment for 'services rendered' ... i.e. they considered it to be taxable income.
    That depends on if the donor tried to deduct the "gift". If he sought deductibility, then yes, it could be considered income to the recipient. If the service allows the deduction, then it will be treated as income to the donee.

    Of course, the service is reluctant to let a high income taxpayer have a deduction for something only to try and collect it from a lower bracket taxpayer who may have blown the money already. It's the old bird in the hand rather than two in the bush theory.

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    Default Re: paying taxes on "gifts"?

    It could be considered "Bartering." And that is taxable income to the recipient. If it is now over (what?)11,000 or 12,000 or more, it is taxable to the giver as a gift, not the recipient. Gift tax is a pretty high percentage, about equivalent to an income tax rate. If these 'gifts' are documented or the giver or you are audited and the amount is noticeable, one of the two of you will be paying IRS and the state, very likely. Only exception of large gifts being taxable I know of are gifts for the purpose of covering medical expenses. Even within a family.
    I loved going to strip clubs; I actually made some friends there. Now things are different for the clubs and for me. As a result I am not as happy.

    Customers are not entitled to grope, disrespect, or rob strippers. This is their job, not their hobby, and they all need income. Clubs are not just some erotic show for guys to view while drinking.

    NOTE: anything I post here, outside of a direct quote, is my opinion only, which I am entitled to. Take it for what you estimate it is worth.

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    Default Re: paying taxes on "gifts"?

    ^^^ that's how it was interepreted in a New York case I know of. Of course the nature of some of the 'gifts' came into play as well ... apartment rent payments, car lease payments being made by 'daddy' on a regular basis.

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    Default Re: paying taxes on "gifts"?

    Quote Originally Posted by threlayer View Post
    It could be considered "Bartering." And that is taxable income to the recipient. If it is now over (what?)11,000 or 12,000 or more, it is taxable to the giver as a gift, not the recipient. Gift tax is a pretty high percentage, about equivalent to an income tax rate. If these 'gifts' are documented or the giver or you are audited and the amount is noticeable, one of the two of you will be paying IRS and the state, very likely. Only exception of large gifts being taxable I know of are gifts for the purpose of covering medical expenses. Even within a family.
    It was $11,500 for 2007 tax year
    These days I like to count my money. I like to wash it delicately and iron it. Sometimes I dry it with some bounty to make it all nice and cuddly. I love my money... did I say that out loud?

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    Banned Melonie's Avatar
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    Default Re: paying taxes on "gifts"?

    ^^^ yes that is the reporting limit for actual 'gifts', on the part of the 'giver'. However, if the IRS determines that a 'payment for services rendered' situation exists (either cash or barter), then every dollar of the gifts is potentially subject to treatment as additional ordinary income to the 'recipient'.

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