| Author |
Message |
blueregret
Guest
|
 Posted:
Thu Oct 20, 2005 8:00 am Post subject:
Gift tax? |
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I am planning to gift $50,000 for my parents to pay for
their second home for retirement purpose. What is the best
way to do that without paying gift tax? Can I write five
separate $10,000 checks for five different person and then
have those five persons each writes a $10,000 check to my
parents? Will it pose any risk for tax auditing? I talked
to an accountant and his answer was that most people just
gift the money without paying for gift tax and I should not
worry too much about it.
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Stuart A. Bronstein
Guest
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| Posted:
Thu Oct 20, 2005 9:07 pm Post subject:
Re: Gift tax? |
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"blueregret" <blueregret@gmail.com> wrote:
| Quote: | I am planning to gift $50,000 for my parents to pay for
their second home for retirement purpose. What is the best
way to do that without paying gift tax? Can I write five
separate $10,000 checks for five different person and then
have those five persons each writes a $10,000 check to my
parents? Will it pose any risk for tax auditing?
|
No, no, no, no, no! That is not the way to go about it at
all.
Technically, unless you've already made $1,000,000 in
taxable gifts, you will incur a tax but won't actually have
to pay anything because no gift tax is due until you've
passed that exemption amount.
If you want to avoid even incurring gift tax, you will have
to keep gifts, as you indicated, below $11,000 per donor per
donee per year. But you can only split gifts (that is, have
someone else treated as the donor of part of the gift) with
your spouse. That means if you are married you and your
wife can give your two parents a total of $44,000 in a
single year without having to worry about gift tax.
The best approach is to give them that amount this year, and
then another $6,000 on January 1.
| Quote: | I talked to an accountant and his answer was that most people
just gift the money without paying for gift tax and I should
not worry too much about it.
|
Ask the accountant if he'll represent you for free if you're
audited, and pay any interest and penalties if you're
caught. If he says no, find a new accountant.
Stu
<< ======================================================= >>
<< The foregoing is intended for educational purposes only >>
<< and does NOT constitute legal OR professional advice. >>
<< >>
<< The Charter and the Guidelines for submitting >>
<< messages to this newsgroup are at www.asktax.org. >>
<< Copyright (2005) - All rights reserved. >>
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Phil Marti
Guest
|
| Posted:
Thu Oct 20, 2005 9:07 pm Post subject:
Re: Gift tax? |
|
|
"blueregret" <blueregret@gmail.com> wrote:
| Quote: | I am planning to gift $50,000 for my parents to pay for
their second home for retirement purpose. What is the best
way to do that without paying gift tax? Can I write five
separate $10,000 checks for five different person and then
have those five persons each writes a $10,000 check to my
parents? Will it pose any risk for tax auditing?
|
Committing fraud always exposes one to some risks.
| Quote: | I talked
to an accountant and his answer was that most people just
gift the money without paying for gift tax and I should not
worry too much about it.
|
That's just what we need--accountants telling people to
fuggedaboudit when it comes to inconveniences in the law.
Stay away from him.
You can give each of your parents $11,000. If you're
married, your spouse can also give each of them $11,000,
bringing you to a total of $44,000. Come January you could
do the other $6,000. If you're single the best you could do
is a total of $44,000 by January.
That's just one approach. You really should talk to your
estate planner to come up with the best one.
--
Phil Marti
Clarksburg, MD
<< ======================================================= >>
<< The foregoing is intended for educational purposes only >>
<< and does NOT constitute legal OR professional advice. >>
<< >>
<< The Charter and the Guidelines for submitting >>
<< messages to this newsgroup are at www.asktax.org. >>
<< Copyright (2005) - All rights reserved. >>
<< ======================================================= >>
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Rich Carreiro
Guest
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| Posted:
Thu Oct 20, 2005 9:07 pm Post subject:
Re: Gift tax? |
|
|
"blueregret" <blueregret@gmail.com> writes:
| Quote: | I am planning to gift $50,000 for my parents to pay for
their second home for retirement purpose. What is the best
way to do that without paying gift tax?
|
First, since we're near the end of the calendar year, you
could give your mom $11,000 this year, your dad $11,000 this
year, your mom $11,000 in Jan, and your dad $11,000 in Jan,
for a total of $44,000. Then give them a $6,000 loan (do
the formal paperwork) and forgive the loan in 2007.
Or, if you are married, you and your wife could give
separate $11,000 gifts to your mom and dad this year (that's
$44,000) and you could give the remaining $6,000 in early
January.
| Quote: | Can I write five separate $10,000 checks for five
different person and then have those five persons each
writes a $10,000 check to my parents?
|
Absolutely not.
| Quote: | I talked to an accountant and his answer was that most
people just gift the money without paying for gift tax and
I should not worry too much about it.
|
That's probably true. So you'll have to decide how much
disobeying the law weighs on your conscience.
--
Rich Carreiro rlcarr@animato.arlington.ma.us
<< ======================================================= >>
<< The foregoing is intended for educational purposes only >>
<< and does NOT constitute legal OR professional advice. >>
<< >>
<< The Charter and the Guidelines for submitting >>
<< messages to this newsgroup are at www.asktax.org. >>
<< Copyright (2005) - All rights reserved. >>
<< ======================================================= >> |
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Vic Dura
Guest
|
| Posted:
Thu Oct 20, 2005 9:26 pm Post subject:
Re: Gift tax? |
|
|
"blueregret" <blueregret@gmail.com> wrote Re Gift tax?:
| Quote: | I am planning to gift $50,000 for my parents to pay for
their second home for retirement purpose. What is the best
way to do that without paying gift tax?
|
You can write them each a check for $10k this year and do
the same in 1/06. The balance will have to wait until 2007
unless you are married. Then both you and you spouse can
write a $10k check to *each* of your parents this year.
That's $40k. Then do the balance (or more) in 2006.
| Quote: | Can I write five
separate $10,000 checks for five different person and then
have those five persons each writes a $10,000 check to my
parents?
|
No.
| Quote: | Will it pose any risk for tax auditing?
|
Yes
| Quote: | I talked
to an accountant and his answer was that most people just
gift the money without paying for gift tax and I should not
worry too much about it.
|
True, unless you get audited.
--
To email me directly, remove CLUTTER.
<< ======================================================= >>
<< The foregoing is intended for educational purposes only >>
<< and does NOT constitute legal OR professional advice. >>
<< >>
<< The Charter and the Guidelines for submitting >>
<< messages to this newsgroup are at www.asktax.org. >>
<< Copyright (2005) - All rights reserved. >>
<< ======================================================= >> |
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joetaxpayer
Guest
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| Posted:
Thu Oct 20, 2005 9:26 pm Post subject:
Re: Gift tax? |
|
|
blueregret wrote:
| Quote: | I am planning to gift $50,000 for my parents to pay for
their second home for retirement purpose. What is the best
way to do that without paying gift tax? Can I write five
separate $10,000 checks for five different person and then
have those five persons each writes a $10,000 check to my
parents? Will it pose any risk for tax auditing? I talked
to an accountant and his answer was that most people just
gift the money without paying for gift tax and I should not
worry too much about it.
|
First, you should get a new accountant.
You married? You and the missus may gift $11,000 each to
each parent. There's $44,000. The extra $6,000 must be
claimed against your lifetime gift/ estate ammount (it's
late, I forget the exact wording, but it's the ammount
exempt from estate taxes, you are allowed to use it up while
alive as long as you account for it. $6,000 worth of it wont
hurt you)
Or wait till Jan 1 to gift he remaining $6,000. Then get the
new accountant. Most people ignore the law, you should too?
That doesn't sound right.
JOE
<< ======================================================= >>
<< The foregoing is intended for educational purposes only >>
<< and does NOT constitute legal OR professional advice. >>
<< >>
<< The Charter and the Guidelines for submitting >>
<< messages to this newsgroup are at www.asktax.org. >>
<< Copyright (2005) - All rights reserved. >>
<< ======================================================= >> |
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Paul A. Thomas
Guest
|
| Posted:
Thu Oct 20, 2005 9:26 pm Post subject:
Re: Gift tax? |
|
|
"blueregret" <blueregret@gmail.com> wrote
| Quote: | I am planning to gift $50,000 for my parents to pay for
their second home for retirement purpose. What is the best
way to do that without paying gift tax? Can I write five
separate $10,000 checks for five different person and then
have those five persons each writes a $10,000 check to my
parents?
|
That's not going to work.
| Quote: | Will it pose any risk for tax auditing? I talked
to an accountant and his answer was that most people just
gift the money without paying for gift tax and I should not
worry too much about it.
|
There wouldn't be any gift tax due, so don't sweat about
having to pay. A return ~may~ need to be filed, but that
yet, remains to be seen.
You can gift $11,000 (going to be $12,000 in 2006 or so I
hear) to each person, so one check to dad for $11,000 and
one check to mom for $11,000. Now we've covered $22,000 of
the $50,000.
If you are married, your wife can also gift $11,000 to your
dad and $11,000 to your mom. Now we've covered up to $44,000
of the $50,000.
If you wait till January, you've got $48,000 covered.
Remember that you can do this each year, and the TOTAL of
all gifts given to that person during the year can't exceed
the $11,000.
So, here's what you can do. Gift about half this year
(before December 31st. And be damn sure that mom and dad
cash that check and that it clears your accounts ~before~
the end of the year. In January, gift the other half.
With a spouse, it's easy to do, and you don't run the risk
of a snag when you make a birthday or other holiday gift to
them.
--
Paul A. Thomas, CPA
Athens, Georgia
paulthomascpapc@bellsouth.net
<< ======================================================= >>
<< The foregoing is intended for educational purposes only >>
<< and does NOT constitute legal OR professional advice. >>
<< >>
<< The Charter and the Guidelines for submitting >>
<< messages to this newsgroup are at www.asktax.org. >>
<< Copyright (2005) - All rights reserved. >>
<< ======================================================= >> |
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