Yup, my thoughts exactly...
The one giving the gift is responsible for declaring and paying the taxes... And it’s a pretty hefty tax as well, IIRC the gift tax is 55%, but I could be wrong. I also believe that there’s a $1,000,000 exemption option as well, but I could also have that wrong too.
The tax code is NOT my forte.
Mark
"If you gave any one person gifts in 2007 that are valued at more than $12,000, you must report the total gifts to the Internal Revenue Service and may have to pay tax on the gifts. The person who receives your gift does not have to report the gift to the IRS or pay gift or income tax on its value."
"Gifts include money and property, including the use of property without expecting to receive something of equal value in return. If you sell something at less than its value or make an interest-free or reduced-interest loan, you may be making a gift."
[snip]
The one giving the gift is responsible for declaring and paying the taxes... And it’s a pretty hefty tax as well, IIRC the gift tax is 55%, but I could be wrong. I also believe that there’s a $1,000,000 exemption option as well, but I could also have that wrong too.
There is a $12,000 a year exclusion per gift receiver, as well as a $1,000,000 lifetime exclusion for the giver. Meaning if I have 5 friends that I want to give gifts to, I wouldn't have to pay any taxes on those gifts (and neither would those who receive them) as long as I kept those gifts below $12,000 a year per person. So I could give away $60,000 in this example without any tax liability... And I could continue to do so every year, until I hit that $1,000,000 lifetime exclusion. Once my total gifts given hits $1,000,000, from that point on, I'd have to pay the gift tax on every dollar I gave away.
And I was also wrong about the rate: It's 45%, not 55%.
Mark
The one giving the gift is responsible for declaring and paying the taxes... And it’s a pretty hefty tax as well, IIRC the gift tax is 55%, but I could be wrong. I also believe that there’s a $1,000,000 exemption option as well, but I could also have that wrong too.
There is a $12,000 a year exclusion per gift receiver, as well as a $1,000,000 lifetime exclusion for the giver. Meaning if I have 5 friends that I want to give gifts to, I wouldn't have to pay any taxes on those gifts (and neither would those who receive them) as long as I kept those gifts below $12,000 a year per person. So I could give away $60,000 in this example without any tax liability... And I could continue to do so every year, until I hit that $1,000,000 lifetime exclusion. Once my total gifts given hits $1,000,000, from that point on, I'd have to pay the gift tax on every dollar I gave away.
And I was also wrong about the rate: It's 45%, not 55%.
Actually, I got the entire $1,000,000 lifetime exemption wrong as well. It kicks in as soon as you exceed the yearly single individual exemption, if you wish. So, tecnhically, I COULD give one person a $1,000,000 gift without having to pay any gift tax on it, using that lifetime exemption: The only thing is that it DOES count against your estate tax exemption...
Mark