Do we have to pay taxes on a gift from my parents?

November 23, 2005

From:  Lisa
Date:  Fri, 04 Nov 2005

Do we have to pay taxes on a gift of $100,000 from my parents for our first home? Do my parents have to pay tax on it?

Answer

Date:  Mon, 07 Nov 2005

Hello Lisa,

Gifts from family members aren't taxable income for income tax reporting. There is a federal gift tax system. Gifts of cash exceeding $11,000 per donor, per donee, per year are exempt from gift tax. For example, your parents can give a total of $44,000 to you and your spouse in one year and not be subject to tax. Gifts exceeding the exempt amount are taxable, but eligible for offset by an allowance of $1 million per individual.

In short, your parents should report the gifts to you and your spouse on gift tax returns, Form 709, for 2005. They probably will not have to pay any cash out of pocket for the gifts, but their lifetime exclusions will be applied. They should consider getting help from a tax return preparer.

Good luck!
Mike Gray

For answers to new questions, subscribe to our newsletter, Michael Gray, CPA's Tax & Business Insight by filling out the form below.


Home    Newsletter Archive    Introducing Michael Gray, CPA    Articles    Tax FAQ   Need Help?    Other Links


Michael Gray, CPA
2190 Stokes St. Ste. 102
San Jose, CA 95128
(408) 918-3162
FAX: (408) 998-2766
Hours: 8am - 5pm PDT Monday - Friday

Find us on Facebook
Follow me on Twitter
Connect on LinkedIn
Connect on Google+
Our Blog

Sign up for our free monthly newsletter,
Tax & Business Insight,
for the latest tax news!

subscribe html
unsubscribe text only

We respect your email privacy!