Gifting cash and the taxman

[gerntz]

Quote:

Originally Posted by Car-Guy The DW and I each write checks for 14k (now 15k) to our DD each year. That's trackable for tax purposes even though it's not reported by anyone on their tax returns.

What tax purpose? There are no taxes involved to my knowledge.

Also, this assumes you never give any smaller gifts to DD thru the year that pushes the total over $15K.

[Souschef]

Quote:

Originally Posted by vchan2177 Runningbum My CPA stated that I should document the paperwork in the event of an audit. This is because the IRS may question how my 20 something daughter and her husband owns a house that is free and clear when she is still going to college. .

You give the IRS too much credit. How are they going to know if the house ifs free and clear? If their property tax, etc is less than the standard deduction, they will not know that they even have a house.

[ERD50]

Quote:

Originally Posted by Souschef You give the IRS too much credit. How are they going to know if the house ifs free and clear? If their property tax, etc is less than the standard deduction, they will not know that they even have a house.

I also don't know how/why the IRS would be triggered, but I would still document it. It would only take a minute, and you never know.

-ERD50

[2177V]

Granted it is not likely that the IRS will not know about my daughter has a house free and clear. However, I can't take the risk. Without documentation for the IRS, you might as well turn around, pull down your pants and bend over....and hope nothing will happen. I always assumed that the IRS may know somehow and I always assumed that I will be audited. Based on these assumptions, I feel more secure.

The $100 CPA fee is an hourly rate which also includes having the CPA review the loan documentation is correct, that the interest rate is valid, and many other questions that I had to fit in one hour. If you see a CPA just for one question then I agree $100 may not be worth it to some people.

However, my ultimate goal was to make sure my daughter will never have to pay a mortgage payment in her life and I had to make sure that I am doing it right. She may end up being a FIRE since I will demand that she invest her money that she will be saving instead of spending it. I will let the readers decide if my $100 CPA fee was worth it or not.

[Sunset]

Quote:

Originally Posted by vchan2177 .... However, my ultimate goal was to make sure my daughter will never have to pay a mortgage payment in her life and I had to make sure that I am doing it right. She may end up being a FIRE since I will demand that she invest her money that she will be saving instead of spending it.....

Good luck with that part. Seriously I hope it works the way you think, but if not come back and make a new thread about how you gave her a house and now she just blows money on stuff rather than investing it.

If you can afford to give her a house, then she knows her inheritance will be BIG, so no need to save.

[2177V]

Sunset
My current wife is 20 years younger than me so I will likely pass away first so my wife will get most of the inheritance.....depending on my will. Our daughter will have to wait until my wife passes away which is about 33 to 36 years from now based on the life expectancy of 83. This is a long time for my daughter to wait.

I may write my will in such a way that she gets nothing if she blows her money but she gets a larger share of the estate if she becomes a FIRE. Thank you for your statement "no need to save" because it made me think!

I am a good father but I can be an evil father too!

[Souschef]

Quote:

Originally Posted by vchan2177 The $100 CPA fee is an hourly rate which also includes having the CPA review the loan documentation is correct, that the interest rate is valid, and many other questions that I had to fit in one hour. If you see a CPA just for one question then I agree $100 may not be worth it to some people. .

I think the main thing is the peace of mind that you got from the CPA that you were doing things correctly-Priceless.

[2177V]

Souschef
I always consulted people who are smarter than me. I never assumed that "I know it all". BTW I noticed your AA as 50/45/5 which is close to mine and I also have SS and 2 pensions. Have you consider reallocating your AA to buy more stock since the stock market has dropped 1200 points recently? The market is spocked because the tariffs and GM layoffs affecting the economy but sooner or later they will reach an agreement and the auto industry will re-organized in the long term.

[Souschef]

Quote:

Originally Posted by vchan2177 Souschef I always consulted people who are smarter than me. I never assumed that "I know it all". BTW I noticed your AA as 50/45/5 which is close to mine and I also have SS and 2 pensions. Have you consider reallocating your AA to buy more stock since the stock market has dropped 1200 points recently? The market is spooked because the tariffs and GM layoffs affecting the economy but sooner or later they will reach an agreement and the auto industry will re-organized in the long term.

I am in a sense, since all my holdings have the dividends and CG's reinvested.

[Crabby Mike]

Quote:

Originally Posted by gerntz The lifetime total of your estate value at death & and gifting exceeding $15K per year, per person, tax-free, is $11 Million as of 2018. Net, if your estate will be under say $5M, you can give your Mom a $1M today and there are no taxes ever. You do need to fill out a tax form for gifts over $15K per year per person, but there is no tax, just a deduction from your $11M estate limit that is tax-free. People seem to never understand this.

I agree (mostly), but just remember that the high ($11.18 million per person for 2018) estate tax threshold is today's, not necessarily what it will be when you die. Conceivably, one could make massive gifts in their lifetime, only to have a future reduction in the unified gift and estate tax threshold put them over the limit. Also, bear in mind that your state may have lower limits than the federal, though some states have an estate tax but no gift tax, which would encourage a big gift as in your example. May be worth consulting that CPA after all ...