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Thread: A LARGE Deposit Question

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    Senior Member velour1141's Avatar
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    Default A LARGE Deposit Question

    Ok, I have a quick question. After all the recent problems of working in TN my grandmother has decided to give me a pretty hefty sum of money to help out... over $20,000. It'll be in a cashier's check. I know that the bank will have to file an IRS report, but stupid question... will I have to pay taxes on it since it is a gift from a family member? Thanks!
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    Featured Member Vamp's Avatar
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    Default Re: A LARGE Deposit Question

    I know some will disagree with me on this.

    I worked at a bank for three years. The only time any reports were done to the IRS was because the amount was over $10,000 in cash. The interest you gain on that amount is reported to the IRS though.

    No Tax on the Person Receiving your Gift or Estate

    The person who receives your gift or your estate generally will not have to pay any gift tax or estate tax because of it. In addition, that person will not have to pay income tax on the value of the gift or inheritance received. NOTE: There are some technical applications for "Income in Respect of Decedent" under §691 that will have to be considered for income earned but not otherwise taxed prior to the date of death.
    http://www.irs.gov/businesses/small/...8,00.html#gift

    My advice would be for you and your grandma to both include the gift on your taxes anyway. Keeping a good paper trail will help if anything does come up about the gift.

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    God/dess VenusGoddess's Avatar
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    Default Re: A LARGE Deposit Question

    I was under the impression, and I could be wrong, that only an amount up to $10,000 was non-taxable as a gift. Anything over that would be taxed. I may have misunderstood, though...hope Dan jumps in here.

    Also, the bank WILL send a 1099 on ALL interest earned on ALL accounts no matter how big or small the amounts. So, just be prepared to put the money on your next year's taxes.

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    Featured Member Vamp's Avatar
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    Default Re: A LARGE Deposit Question

    The link i posted from the goverments website. It talks about gift and estate taxes in great detail.

    I recieved a gift from my grandma too a few years ago. I mentioned it to my tax preparer. He included the information on my tax form even though it wasnt taxable. I am not sure which part of the form the information was included on though. It is always best the keep copies of such checks as proof that it was a gift as well. It might seem excessive but it is better to be safe than sorry.

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    Default Re: A LARGE Deposit Question

    Couldn't you claim $10,000 as a gift and the rest as a "loan?"

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    Default Re: A LARGE Deposit Question

    Quote Originally Posted by Pan Dah
    Well yeah, I suppose you could claim the whole 20K+ as a loan if you wanted. But why? Between annual exemption, lifetime additional exemption, and five-year forward averaging she doesn't owe any taxes anyway. If there are any other beneficiaries of her grandmother's estate when she dies, and there is "documentation" of a loan, the executor/trix would have to ask for repayment at that time. This could get embarrassing and messy.

    Why complicate a fairly simple transaction by trying to be devious when it's not necessary?
    So the OP would not owe taxes on the $20K?

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    Veteran Member StuartL's Avatar
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    Default Re: A LARGE Deposit Question

    I can't speak for the US rules, but in the UK the tax would become due if the giver (gran) dies within a certain timeframe. Then it would be charged inheritance tax if certain other conditions are in place. That may be an angle to investigate that helps.

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    Featured Member Vamp's Avatar
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    Default Re: A LARGE Deposit Question

    The applicable exclusion amount is increased to $2,000,000 for estates and remains at $1,000,000 for gifts

    http://www.irs.gov/businesses/small/...8,00.html#gift

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