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Thanks for the link. I just read parts of it and will read the rest later tonight. But I still have a few questions. It says that my parents can jointly give the money. Does it then have to come from a joint account?

No.

And should the checks be payable to me AND my wife or me OR my wife or just one of us (I mean the checks my parents write to us and that we put in the bank before we write a check to the builder--I don't suppose the money has to go directly from my parents to the builder).

The best way, for tracking purposes, is to issue four checks, each for $11,000. However, your parents can issue two checks for $22,000 each -- one payable to you and one to your wife. If they choose to go this route, they will still have to file a Gift Tax return (Form 709) indicating that they are splitting the $22,000 gift between them, thereby avoiding gift tax. The money should go to you first (again, this just helps identify the gift), but doesn't have to.

Is there also an exclusion of $11,000 for the money my parents give to my kids for college or other expenses?

If they give the money directly to the children, yes. However, they can pay any amount of tuition (but only tuition) directly to the college and still give another $11,000 each to the child.

Also, if my parents ever went beyond the $11,000 limit in the past (I'm not sure if they did), can the IRS tell them so that they can know?

Possibly. They should know because they would have had to file a Gift Tax return in any year where they exceeded the limit. (BTW, the limit was $10,000 before, I think, 2004.)

How does the IRS keep track of it? I just want to make sure that I do everything correctly and legally. Thanks.

Through the Form 709 filings.

Ira
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