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Old 10-08-2021, 10:59 AM   #21
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Similarly, have you ever gone to a casino and won any money? Did you report your gambling winnings? I'm sure most don't but technically that's false reporting. Isn't that income tax evasion?.... The IRS knows, or can easily find out in many/most cases if you win "anything" in a casino...(even a few dollars)...

I think gifting would be harder for them to track for non cash gifting. (Vacations, dinners, or even folding cash)... Gifting cars, houses, and checks are of course much easier to "see"..Of course, honesty is the best (well safest) policy.
I don't gamble, so I report neither winnings nor losses. I've been a volunteer tax preparer though, and had clients who reported winnings. Most of those won enough to trigger the casino to issue a tax form (1099 maybe?), so that helps them be more honest. We always ask about any losses to deduct against winnings, as that is legal to do so.

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It's coming. They didn't build all these massive computer farms and plan on hiring tons more people just to track the handful of billionaires in the US.
That is only a proposal at this point.
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Old 10-08-2021, 11:01 AM   #22
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Coming back to the 529 question.... (Sorry for the hijack). What if a kid decides not to go to college because they found another field that fulfills their goals, but the sibling wants to do medical school/phd/etc. Under the 529 rules the owner (parent?) can change the beneficiary. Does that trigger a new gift tax threshold? How does this work since the original beneficiary isn't benefitting from the "gift"?

These 529 tax considerations are so convoluted.
No worries. I'm learning from that aspect of the discussion as well, since there are 529s floating around for my kids and niece/nephews that may get passed along to the next generation.

As a further threadjack, and appropos of nothing, I'm fairly certain that the number of properly prepared and timely filed Form 8606s is close to zero.
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Old 10-08-2021, 11:53 AM   #23
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I don't gamble, so I report neither winnings nor losses. I've been a volunteer tax preparer though, and had clients who reported winnings. Most of those won enough to trigger the casino to issue a tax form (1099 maybe?), so that helps them be more honest.
They are called W2G's and are triggered/issued on any "single" win/hit over $1199 on slots... Note, there are no W2G's issued on table games no matter how much you win.... CTR's are issued when you "cash in" your chips from a table game over 10k, but that doesn't mean you won 10k, so no taxes are withheld...


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We always ask about any losses to deduct against winnings, as that is legal to do so.
Yes, all winnings must be reported... But to claim your losses, (to off set your winnings) you must itemize.
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Old 10-08-2021, 12:12 PM   #24
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Similarly, have you ever gone to a casino and won any money? Did you report your gambling winnings? I'm sure most don't but technically that's false reporting. Isn't that income tax evasion?.... The IRS knows, or can easily find out in many/most cases if you win "anything" in a casino...(even a few dollars)...
Fortunately my casino losses more than offset any winnings.
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Old 10-08-2021, 12:22 PM   #25
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Fortunately my casino losses more than offset any winnings.
BUT, you still must report your winnings and pay the tax... It doesn't matter if you lost more, you still must (should ) report them as income. You can offset your winnings by itemizing and deducting your losses but your winnings will/may (if you won enough) put you in a higher tax bracket and even push you into dealing with IRMAA tier penalties. (don't ask me how I know) Of course there are other considerations when deciding to itemize, so if the dollars are small, it's probably not going to be worth it and just pay the tax on the winnings.
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Old 10-08-2021, 01:16 PM   #26
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Questions:

1. Is my understanding correct that "in kind" gifts to kids would count towards the $15K annual gift tax exemption amount?
2. At what level do you or people you know keep track of this sort of stuff? Do you only gift $14,980 plus a hamburger? $12,000 plus a cruise?
1- Yes, that's my understanding too.... ex. I once gave a car to my DD... I estimated the value using KBB and added that to the cash I gave her for the year.
2- I don't track things like hamburgers, but I do track things like Christmas and Birthday gifts since those are nice chucks of change. In the end I file form 709 anyway since I'm gifting over 15k but I round it off (up) to the nearest 1k.
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Old 10-08-2021, 03:11 PM   #27
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If you are married you can actually gift her $30,000 each year. $15k from you and $15K from the Mrs.
Right. We could do 30k and 20k, or 25k and 25k, to accomplish our gifting.
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Old 10-08-2021, 06:49 PM   #28
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Still wrapping my head around the op's hypothetical of in kind gifts.

If a child is a dependent I assume you don't have to track misc stuff you cover. But I have a kid who is a part time student, works 30 hrs a week, and claims himself. We help him out by covering his health insurance premiums (low cost because he's low income). We also still have him on our car insurance because he is using a beater truck we own. It totals under $15k a year so under the limit... But would this stuff count?
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Old 10-11-2021, 12:29 PM   #29
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Strangely, the tax code explicitly defines 529 contributions as gifts to the named beneficiary, even if they are made by the account's owner.

For 529s the law also provides an option to spread the gift over up to 5 years, but you still have to file a gift tax return and check the appropriate box to elect that treatment.
Exactly what I did. Reported the $100K on gift tax form and then deducted $20K off my states taxes over 5 years.
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Medical donations are exempt from gift tax treatment
Old 10-11-2021, 09:12 PM   #30
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Medical donations are exempt from gift tax treatment

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Originally Posted by rodi View Post
We help him out by covering his health insurance premiums (low cost because he's low income).... But would this stuff count?
Medical expenses, including health insurance, are exempt from gift tax treatment, just like tuition is:

https://www.stokeslaw.com/news-and-i...ition-expenses

My father covers my health care bills. He does this because he assumes he will hit the lifetime estate tax exemption and have to pay estate tax. Therefore he is looking for any tax-favorable way to give my brother and I money or assets while he is still alive.

As the page above details, the "donor" needs to pay relevant bills directly - no reimbursing.
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Old 10-15-2021, 12:37 AM   #31
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For those interested in this topic, I came across this Bogleheads thread which discusses it a bit:

https://www.bogleheads.org/forum/vie...p?f=2&t=345728
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Old 10-15-2021, 04:05 PM   #32
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When we helped our DD&DSIL with a down payment on a house, we gave each of them $12,500 from each of us, so $50k, in December. Then we did it again in January, so we could give them a total of $100k for their house.

OK, that’s of course something that is large and pretty visible to the IRS, should they take a peek. Still, all within the law.

But realistically, what about the hamburger? What if they fall on hard times, and you help them out by buying groceries? According to the law, I’m sure the government wants to see every penny, down to the last 5 fries and two onion rings I gave my daughter from my lunch. But that is just ridiculous, as is reporting helping them make a months rent or a week’s groceries if they’re experiencing tough times.

Finally, even though “currently”, in the events of our demise, there wouldn’t be any federal tax consequences on our estate. But what about next year, or the year after that? Proposals abound to reduce the estate exemption to a million or two, or five. Then, many of us here would be impacted. We’ve already begun contingency planning for such a change to the estate tax laws….by helping the kids pay down mortgages, car loans, getting new cars, etc, as needed, but by remaining within our annual exemption. And if they ever need a pack of strawberries when I’m at the market, I have no plans to add up every 88 cents I spend on things my kids eat.
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Old 10-15-2021, 04:45 PM   #33
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Finally, even though “currently”, in the events of our demise, there wouldn’t be any federal tax consequences on our estate. But what about next year, or the year after that? Proposals abound to reduce the estate exemption to a million or two, or five. Then, many of us here would be impacted. We’ve already begun contingency planning for such a change to the estate tax laws....
This is actually the root motivation for my original question.

I'm 52 and my Dad is 85. Depending on a number of variables, I may or may not have an estate tax problem. I'm trying to figure out if I should address it via disclaimer or BTD and aggressive gifting. I'm leaning towards the latter but am still mulling it over. I think it is likely but not certain that there is enough gifting capacity to manage my (possible) (first world) problem.
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Old 10-15-2021, 04:50 PM   #34
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Medical expenses, including health insurance, are exempt from gift tax treatment, just like tuition is:

https://www.stokeslaw.com/news-and-i...ition-expenses

My father covers my health care bills. He does this because he assumes he will hit the lifetime estate tax exemption and have to pay estate tax. Therefore he is looking for any tax-favorable way to give my brother and I money or assets while he is still alive.

As the page above details, the "donor" needs to pay relevant bills directly - no reimbursing.

OK, so does that means I could give more than the $15K towards tuition and not have to file a 709? Oh, I see I need to pay it direct! We couldn't take the tax credits and deductions, but they could so we gifted the money.

Wife and I have been giving $15k each to my daughter and also giving $15k each to my to her husband to pay for tuition, but some years she has had to buy equipment to practice with and we paid for that directly. So it seems our $15k checks were gifts under the gift tax treatment and the tools we bought were exempt from the gift tax treatment?
We also pay her health insurance, that is also exempt from the gift tax treatment.
Now I'll read the URL posted.
EDIT

Reading sucks! " payments for costs of supplies, books, dormitory fees or board do not qualify for the exclusion."
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Old 10-15-2021, 05:12 PM   #35
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This sounds like an opportunity to employ don’t ask, don’t tell. Family vacations & dinners with our hard earned already taxed money will not (should not) be taxed a 2nd time unless I tell. My lips are sealed.
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Old 10-15-2021, 05:18 PM   #36
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OK, so does that means I could give more than the $15K towards tuition and not have to file a 709? Oh, I see I need to pay it direct! We couldn't take the tax credits and deductions, but they could so we gifted the money.
There's no need to gift them the money in that way.

If you pay the school directly for tuition, your child can still claim the education tax credits if they are not your dependent and assuming they otherwise qualify for the credits. From the instructions for Form 8863:

"Expenses paid by a third party. Qualified education
expenses paid on behalf of the student by someone other than
the student (such as a relative) are treated as paid by the
student. However, qualified education expenses paid (or treated
as paid) by a student who is claimed as a dependent on your tax
return are treated as paid by you."

-- page 2, https://www.irs.gov/pub/irs-pdf/i8863.pdf

Your payment to the school would be exempt from gift tax if paid directly and used for tuition.
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Old 10-15-2021, 06:13 PM   #37
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There's no need to gift them the money in that way.

If you pay the school directly for tuition, your child can still claim the education tax credits if they are not your dependent and assuming they otherwise qualify for the credits. From the instructions for Form 8863:

"Expenses paid by a third party. Qualified education
expenses paid on behalf of the student by someone other than
the student (such as a relative) are treated as paid by the
student. However, qualified education expenses paid (or treated
as paid) by a student who is claimed as a dependent on your tax
return are treated as paid by you."

-- page 2, https://www.irs.gov/pub/irs-pdf/i8863.pdf

Your payment to the school would be exempt from gift tax if paid directly and used for tuition.

Thanks, always more to learn, much of it to late.

The 8th and last tuition check is due in Dec.
So, maybe, I'll pay it direct, then still gift them $xxk. It would help them, as they're rehabbing a house, and she totaled out her car about two weeks ago and they didn't get enough insurance money to cover the money they put down on the car.
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Old 10-15-2021, 07:00 PM   #38
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Thanks, always more to learn, much of it to late.

The 8th and last tuition check is due in Dec.
So, maybe, I'll pay it direct, then still gift them $xxk. It would help them, as they're rehabbing a house, and she totaled out her car about two weeks ago and they didn't get enough insurance money to cover the money they put down on the car.
Congratulations on the last tuition check! It's a nice feeling, isn't it? (I have one done, two sophomores ETA December 2024.)

I have new realizations all the time. I have been giving my kids cash at Christmas, which ultimately comes from my taxable account. It'd be more efficient for me to give them stock and have them sell.
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Old 10-16-2021, 10:40 AM   #39
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Just a comment...one could give daughter $15,000 from mom and another $15,000 from dad...am I correct?

Also I will investigate but can she take money that she has put in from her Roth for a house deposit....or is that on the slate to change if it is the case..
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Old 10-16-2021, 10:56 AM   #40
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Just a comment...one could give daughter $15,000 from mom and another $15,000 from dad...am I correct?

That's how I understand it, that how we gift $60k, $15k each from mom and dad to daughter and $15k each to son in law.


Also I will investigate but can she take money that she has put in from her Roth for a house deposit....or is that on the slate to change if it is the case..[/QUOTE]


Look into it, I think there is a provision for first time home buyers.
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