Do I Have To Pay Taxes On Gifts?
 This link takes you to my YouTube Channel and the video “Do I Have To Pay Taxes On Gifts?“.

Dear Stefanie:

    If I give my daughter more than $14,000.00 this year, do I have to pay tax on this? I am not rich.

– Gift Giver on Gamay

Dear Gift Giver on Gamay:

There is a ton of misinformation on the topic of annual gifts and taxes. The rule is that if you give more than $14,000 in any one year to a single person, the IRS wants you to FILE a gift tax return – Form 709. You declare how much over $14,000.00 that you gave, but a gift tax is NOT collected on annual gifts over $14,000 until the total aggregate gift giving over your lifetime exceeds $5.45 million. That is a lot of dough! Most of us will never give that much while alive. If you have not given millions of dollars in prior gifts, you just need to REPORT the gift – not pay a tax.

I had a related experience this month that really scared a client. This client gave $100,000 to her daughter to qualify for nursing home care. I told her to report the gift to the IRS. Her tax preparer, not familiar with the rules, told her that she owed $25,000.00 in tax (i.e.: 25% on anything over $14,000). She called me in a complete panic and I had to call the tax preparer to discuss the rules. She owed no tax and only needed to report the gift.

Advisors can’t know everything all the time. It is important to have a team of advisors who can keep one another grounded on Earth and in reality!

In this video I talk about “Do I Have To Pay Taxes On Gifts?“.