17K Gifting Limit

[Livefree]

We are gifting our son $20k to add to his down payment on a house he's buying.


Do we need write separate checks from my wife and I to stay within the limit?


I really just want to transfer the money to him all at once..


Not really sure if this would be a red flag or not..

 

[Alan]

I don't do two "checks". The money comes from our joint bank account so I figure it is obvious if I am ever approached on this. (We give our kids $30k/year via bank transfer)

 

[Livefree]

I don't do two "checks". The money comes from our joint bank account so I figure it is obvious if I am ever approached on this. (We give our kids $30k/year via bank transfer)

Good advice..it is a joint account, so were covered..Thanks.

 

[Dash man]

We write one check from a joint checking account when we gift to the boys. Never been questioned.

 

[audreyh1]

No need to write two checks.

If you ever file the gift form (not needed in this case) there is a place for spouses to declare that the gift is shared regardless, and each spouse files for half the amount.

 

[Car-Guy]

The DW and I have been giving the DD "up to the limits" each year from our joint checking account. One check from each of us 6 months apart. Some years we have exceeded that (ex. bought a house for her one year) and we filed tax form 709. No big deal.


Not sure how close this stuff is actually tracked anyway.

 

[O2Bfree]

I gifted my niece $40k for her downpayment a few months ago. Just needed to provide a W-9 to the bank and fill out a gift letter. And then I'll claim it against my lifetime gift allowance on my taxes.

 

[ERD50]

I gifted my niece $40k for her downpayment a few months ago. Just needed to provide a W-9 to the bank and fill out a gift letter. And then I'll claim it against my lifetime gift allowance on my taxes.

But that's different - you are documenting it at the time with the gift form (709 I think?) .

There is no documentation required under the $17K limit (or whatever it is currently). So while people say "no need", or "It's never been questioned", I think the minimal effort required to write two separate checks would be worth it in case it ever is questioned. An ounce (mL?) of prevention.

Write the specifics on each check, keep a copy with that year's taxes, and tit's easy and could not be any clearer. I'd go the safe route, and write separate checks, with comments.

-ERD50

 

[RunningBum]

There is no documentation required under the $17K limit (or whatever it is currently). So while people say "no need", or "It's never been questioned", I think the minimal effort required to write two separate checks would be worth it in case it ever is questioned. An ounce (mL?) of prevention.

Write the specifics on each check, keep a copy with that year's taxes, and tit's easy and could not be any clearer. I'd go the safe route, and write separate checks, with comments.

-ERD50

They said it's a joint account, so presumably both names are on the check. In the memo section they could write "From both of us". That would be just as safe, IMO.

If they had different individual accounts, I think I'd agree that writing two checks, while unnecessary, is a little safer.

 

[audreyh1]

All you have to ever say if questioned - each spouse simply states that it is/was a shared gift.

 

[youbet]

I don't do two "checks". The money comes from our joint bank account so I figure it is obvious if I am ever approached on this. (We give our kids $30k/year via bank transfer)

Technically, there is a form to fill out (can't remember the number and no time to research now) where each person on the joint account designates the portion of the bequest they are giving. The owners of a joint account might not be a married couple or even related so this protects one person from using some of the other's gift tax exemption.

OTOH, I agree with you that it's extremely unlikely you're going to be questioned on this and even if you were, could make the case that it was an honest mistake that you didn't know about the form or requirement.

 

[O2Bfree]

But that's different - you are documenting it at the time with the gift form (709 I think?) .

There is no documentation required under the $17K limit (or whatever it is currently). So while people say "no need", or "It's never been questioned", I think the minimal effort required to write two separate checks would be worth it in case it ever is questioned. An ounce (mL?) of prevention.

Write the specifics on each check, keep a copy with that year's taxes, and tit's easy and could not be any clearer. I'd go the safe route, and write separate checks, with comments.

-ERD50

Yup, I'll do a 709. I won't ever exceed the lifetime $12.92 million gift limit, so documenting it won't cause me any issues.

 

[OldShooter]

Just to be clear for folks unfamiliar with this, there is no gifting "limit." The $17K is a reporting threshold and, if you have a large enough estate, will cause the reported gift to be included in the total estate value for estate tax purposes. For most of us, that is not an issue so the reporting threshold just creates a time-wasting task.

Also, in the real world what is the likelihood that the IRS will slog back through years of records looking for gifts that exceed the threshold but no form was filed? My guess is zero chance.

 

[ERD50]

They said it's a joint account, so presumably both names are on the check. In the memo section they could write "From both of us". That would be just as safe, IMO.

If they had different individual accounts, I think I'd agree that writing two checks, while unnecessary, is a little safer.

I guess I just get paranoid in dealing with the IRS. I did have a small issue a few years back, ~ $100 in total, and due to a typo, and it took hours and hours and hours on hold and several attempts months apart (while waiting to see if the correction went through) to get it settled. Tax was paid, but not credited to the right account - the whole time I was still getting scary threats that they may freeze my assets (and I was in the process of putting the house up for sale).

So I won't take any chances if easily avoided. I know, it sounds kinda silly, but I somehow imagine some rookie IRS agent saying "I don't see any regulations on a 'joint gift', it only say 'per person' ". I just don't want to have to explain anything. Separate checks is as clear as it can get, and is so little trouble, that's what I would do. I'm not trying to convince anybody, I'm just spelling out my reasoning.

-ERD50

 

[Car-Guy]

Just to be clear for folks unfamiliar with this, there is no gifting "limit." The $17K is a reporting threshold and, if you have a large enough estate, will cause the reported gift to be included in the total estate value for estate tax purposes. For most of us, that is not an issue so the reporting threshold just creates a time-wasting task.

Also, in the real world what is the likelihood that the IRS will slog back through years of records looking for gifts that exceed the threshold but no form was filed? My guess is zero chance.

+1

 

[Koolau]

We are gifting our son $20k to add to his down payment on a house he's buying.


Do we need write separate checks from my wife and I to stay within the limit?


I really just want to transfer the money to him all at once..


Not really sure if this would be a red flag or not..

90 degrees to the discussion, be prepared to write a letter (probably notarized) that it was a gift and not a loan. This may be required by the mortgage holder. We had to do it for DD when we gifted most of her down payment.

 

[Alan]

Just to be clear for folks unfamiliar with this, there is no gifting "limit." The $17K is a reporting threshold and, if you have a large enough estate, will cause the reported gift to be included in the total estate value for estate tax purposes. For most of us, that is not an issue so the reporting threshold just creates a time-wasting task.

Also, in the real world what is the likelihood that the IRS will slog back through years of records looking for gifts that exceed the threshold but no form was filed? My guess is zero chance.

I agree.

Are there any penalties for failing to report a gift that exceeds the threshold in this manner? If not then there no financial benefits to the IRS in trawling for small errors like this.

 

[O2Bfree]

90 degrees to the discussion, be prepared to write a letter (probably notarized) that it was a gift and not a loan. This may be required by the mortgage holder. We had to do it for DD when we gifted most of her down payment.

My niece's bank provided such a letter, which I completed and returned online. Her loan officer also had me send a few months' worth of statements for my checking account. At first she said I'd need to print them out and take them to the bank, have someone validate and sign each page, then send them to her. But it turned out that the screen captures I sent were sufficient.

 

[Car-Guy]

I agree.

Are there any penalties for failing to report a gift that exceeds the threshold in this manner? If not then there no financial benefits to the IRS in trawling for small errors like this.

For money that's gifted under the max lifetime limits, what are they going to do? Tax us on previously taxed money? Maybe I shouldn't be giving them any ideas.

 

[Souschef]

For money that's gifted under the max lifetime limits, what are they going to do? Tax us on previously taxed money? Maybe I shouldn't be giving them any ideas.

I did some research, and the bottom line was that there is a penalty for not filing the form if you owe taxes. One publication called it the penalty enigma, in other words, no tax owed, no penalty.
I still think it is safer to file even no taxes are owed.

 

[audreyh1]

We don’t file the gift tax form unless together we exceed the annual gift exemption.

 

[Car-Guy]

I did some research, and the bottom line was that there is a penalty for not filing the form if you owe taxes. One publication called it the penalty enigma, in other words, no tax owed, no penalty.
I still think it is safer to file even no taxes are owed.

Makes perfect sense to me.

 

[old medic]

i (we give our kids $30k/year via bank transfer)

dad!!!!! Is that you??

 

[EastWest Gal]

If it were me I would avoid filing a form 709 if it is not needed. A gift above the limit adds to the lifetime limit which is figured into the estate tax and the form 709 allows tracking of the gifts. Gifts under the $17K limit are not tracked for estate tax purposes. I think using the memo line on the check stating it is from the both of you should suffice.

 

[Unpaintedhuffhines]

I gifted my niece $40k for her downpayment a few months ago. Just needed to provide a W-9 to the bank and fill out a gift letter. And then I'll claim it against my lifetime gift allowance on my taxes.

I was under the impression that gifting over $17K (per person) in any one calendar year would result in taxes being paid that year by the person giving the money. So, if I give my niece $40K, and I'm not married, then I pay taxes on $40K-$17K, or $23K. If I'm married, I can give $17K, wife can give $17K, and we only pay taxes on $6K.

Are you suggesting that I can gift any amount I want (subject to the lifetime limit) with no tax implications to me?