Gift Tax Ques. Please help

If I gift an amount over $10,000 to my children, I understand that I must report it to the IRS. Do my children then have to report it on their tax return also?

Yes. The gift tax is charged to the receiver of the gift as income.

gift tax

I have good news for you. First of all, the gift is not taxable to your children as income. It is one of the few things that is exempt. However, if the gift is over $10,000 ($20,000, if you are married and your wife joins in the gift) to any one child, the amount over $10,000 (or $20,000) is subject to gift tax. However, in addition to the annual $10,000 ($20,000) deduction for each gift to a separate child, there is currently a lifetime exclusion of $675,000.

To Loku,

I'm confused by your post. Are you saying that if I gift my son $50,000 this year but do not intend to gift my son anymore money the rest of his life, there is no gift tax?

Secondly, you say that gift tax is not taxable to children as income. Do you mean if it does not exceed the $10K rule or do you mean ever?

Gift tax

I suggest you go to the following url for the "Free Advice" material on gift tax. That should not only answer your questions, but give you an idea of what the gift tax is.