Do we have to pay taxes on a gift from my parents?
November 23, 2005
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?
Date: Mon, 07 Nov 2005
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.
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