$$ Gift question

[COZICAN]

I have a CPA but don't want to discuss this with him......yet. My DW's aunt receives oil royalties that are put into a trust. She pays all of the taxes on those royalties. She then divides it up between siblings (or in our case survivors of siblings). It's not a lot; less than $10K yearly. Is this taxable income?

 

[pjm-7]

Is the aunt giving the money to you or is the trust paying the money to you? If aunt has taken the money out and gives you a gift of money it is like any other gift and not taxable income to you. However, if trust is paying, trusts don't gift.

 

[audreyh1]

No, not taxable income.

An individual may gift up to $15,000 to another individual each year with no paperwork. It’s been $14,000 since 2013.

Above this annual gift tax exclusion, they simply have to file papers declaring it because the excess counts against their estate tax exemption when they die.

Edited to add: Oh, I don’t know about the trust part....

But if it’s income to her, she’s paying taxes then gifting it seems you are in the clear.

 

[COZICAN]

No, not taxable income.

An individual may gift up to $15,000 to another individual each year with no paperwork. It’s been $14,000 since 2013.

Above this annual gift tax exclusion, they simply have to file papers declaring it because the excess counts against their estate tax exemption when they die.

Edited to add: Oh, I don’t know about the trust part....

But if it’s income to her, she’s paying taxes then gifting it seems you are in the clear.

That's what I deemed correct. We've never even questioned it until we started planning retirement and looking at MAGI. Thank your for your input.

 

[COZICAN]

No, not taxable income.

An individual may gift up to $15,000 to another individual each year with no paperwork. It’s been $14,000 since 2013.

Above this annual gift tax exclusion, they simply have to file papers declaring it because the excess counts against their estate tax exemption when they die.

Edited to add: Oh, I don’t know about the trust part....

But if it’s income to her, she’s paying taxes then gifting it seems you are in the clear.

That's what I thought but wasn't sure if it was from "an individual" or just parents.

 

[audreyh1]

That's what I thought but wasn't sure if it was from "an individual" or just parents.

Anyone.

There may be some US citizen constraints in terms of giftor or giftee. Don’t remember.

 

[kgtest]

DW received oil royalties via a trust that she was named on, and that was a taxable event that we filed on our tax returns.

 

[Spock]

Suggest to auntie that you would like your gift in the form of pictures of dead presidents.

 

[audreyh1]

DW received oil royalties via a trust that she was named on, and that was a taxable event that we filed on our tax returns.

Sure, but that has nothing to do with your wife turning around and gifting the after tax money to her nephew.

 

[COZICAN]

Sure, but that has nothing to do with your wife turning around and gifting the after tax money to her nephew.

That make sense. The royalties are paid directly to her in her name. She does not have to share with her siblings but accepted that role in the family and follows her deceased mothers wishes. The siblings who were alive at the time were all too happy to let her deal with it all.

 

[RunningBum]

A little curious why you have a CPA if you won't ask them questions like this, instead relying(?) on internet strangers. In any case it seems pretty obvious that since she is paying the tax on it, and the amount does not exceed the gift exclusion amount (and even if it did, that wouldn't immediately trigger taxation), that you don't owe a tax on it.

 

[COZICAN]

A little curious why you have a CPA if you won't ask them questions like this, instead relying(?) on internet strangers. In any case it seems pretty obvious that since she is paying the tax on it, and the amount does not exceed the gift exclusion amount (and even if it did, that wouldn't immediately trigger taxation), that you don't owe a tax on it.

Because he is such a stickler (which is why I use him) but I didn't want to set off alarms in his head unnecessarily. I was pretty sure I knew the answer but wanted some of your opinions and advise. If it were not for internet strangers what would even be the purpose of having an internet message board? Thank you for your time.