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Financial Planning / Tax Strategies
|Subject: Re: Affect of Cash Gifts on Taxes||Date: 8/25/2001 12:01 AM|
|Author: irasmilo||Number: 53558 of 120395|
I recently parted with $10k to help a friend in need and wasn't sure if that could be considered as a gift.
If you give money away without expectation of repayment, it's a gift.
I've heard very little on gifts and how they relate to taxes but are they a help?
No, they are not a help. In fact, they can lead to additional tax owed by the giver, not the recipient. If you give more than $10,000 to a single individual in a single year you are subject to Gift Tax (Form 709). What generally happens is that you file the return and the value of the gift(s) above the $10,000/individual/year level is subtracted from your lifetime Estate Tax exclusion (currently $675K, $1M in 2002). Until you exceed your lifetime exclusion, you don't pay the tax now.
Where can I find more information on them, if they exist.
See the instructions for Form 709. They should be available at the IRS web site, www.irs.gov.
Also, I want to be sure that the other party would not have to pay additional taxes.
There are never any taxes due to the receipt of a gift. Of course, any income earned on the gift (interest, dividends, etc.) is taxable.
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