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Author: tchatt Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121097  
Subject: Gift Tax question.... Date: 1/7/2002 9:11 AM
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My In-Laws are giving my spouse and I $10,000. The money will be wired into our account sometime this week. This money originally came from the sale of my spouse's grandfather's house, who passed away in November. My wife and I are going to use the money for closing costs and towards a down payment on a house (first house). I have 2 questions...

1) What do we have to file if anything?
2) What should we get from my spouse's mother to show where the money came from?

Thanks,

TC
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Author: lorenzo2 Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56851 of 121097
Subject: Re: Gift Tax question.... Date: 1/7/2002 10:32 AM
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1) What do we have to file if anything?
2) What should we get from my spouse's mother to show where the money came from?


The quick answer is:
1) you don't have to file anything, and
2) you don't have to demonstrate to anyone where the money came from

If your in-laws give you lots more money this year, they may have some paperwork to fill out - but as the recipient, you don't have to do anything.



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Author: jrspec Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56852 of 121097
Subject: Re: Gift Tax question.... Date: 1/7/2002 11:28 AM
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And keep in mind that taxes aside, you may want to retain a "paper trail" on the money for your bank; some are pickier than others, and it may depend on your loan, but most require some evidence documenting the source of "gift funds."

jrspec

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Author: tchatt Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56858 of 121097
Subject: Re: Gift Tax question.... Date: 1/7/2002 1:49 PM
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Thanks!

I am hoping that since I am going to my regular bank for my mortgage and that the money is being wired into my account, that they will have al that they need. If not then I shouldn't have a problem coming up with a trail.

Thanks a lot!

TC

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Author: noratr One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56894 of 121097
Subject: Re: Gift Tax question.... Date: 1/8/2002 1:21 AM
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Keeping a paper trail is adviseable. I recently heard someone mentioning that banks are required to report to the IRS any "big deposits" into an account. I believe the "big deposit" amount was $10K.


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Author: buc99 One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56896 of 121097
Subject: Re: Gift Tax question.... Date: 1/8/2002 1:36 AM
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". I recently heard someone mentioning that banks are required to report to the IRS any "big deposits" into an account. I believe the "big deposit" amount was $10K."



That applies for deposits made in CASH.


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Author: Mark0Young Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56935 of 121097
Subject: Re: Gift Tax question.... Date: 1/8/2002 10:02 PM
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I am hoping that since I am going to my regular bank for my mortgage and that the money is being wired into my account, that they will have al that they need. If not then I shouldn't have a problem coming up with a trail.

The bank would know the money was wired in, but the bank wouldn't know if it were a loan or not.

If this money is going to be used as a down payment and you are starting the paperwork in less than 60 days, you would want to ask for a "gift letter", which is a letter from the party that wired you the money, stating that (1) the money is a gift, and (2) they don't expect any repayment, and the letter should be dated and signed. Let them know a copy of the letter is going to your mortgage company so they don't add anything that they wouldn't want strangers to read.

Generally, if the money is in one of your accounts for over 60 days, the mortgage company considers it "seasoned" and generally doesn't ask where the money had come from. If it is less than 60 days, the mortgage company becomes concerned that it may be a loan, and thus would like something to relieve them of that concern, such as a gift letter, or statement of receiving it as an inheritance, record of sales of an asset.

By the way, the mortgage company would want two years of W-2 statements (or tax return statements if the qualifying income includes non-wage income), two months of bank statements, pay stubs, etc., because they package up that documentation to send to the underwriters.

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Author: Mark0Young Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 56936 of 121097
Subject: Re: Gift Tax question.... Date: 1/8/2002 10:12 PM
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I recently heard someone mentioning that banks are required to report to the IRS any "big deposits" into an account. I believe the "big deposit" amount was $10K.

Yes, for $10,000 or more in cash, and that includes amounts less than $10,000 that add up to $10,000 or more, have to be reported to the IRS by the bank.

However, I heard that a number of financial institutions also report non-cash deposits of $10,000 or more.

The intent, though, is to track large transactions made without tracable instruments, supposedly to get info on drug traffic.

If the IRS keeps a record of every non-cash transaction of $10,000 or more, I am sure they got records from my credit union and from my taxable investments fund family. On the other hand, if they are tracking just cash transactions, they have nothing on me for a cash transaction over $200. 8)

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