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Originally Posted by jlcl What is the name of your state (only U.S. law)? California
Mom wants to help pay for a down payment for a house for her eldest daughter. She plans to give $12k each to her three other children and her husband and have them each give $12k to the eldest daughter (so to give a total of $48k). Since Mom has a $12k annual gift tax maximum for each person, Mom should be free from gift tax and reporting the transactions to the IRS. What about the daughter who received $48k in cash. Does the recipient of the gifts have any tax implications? |
There is never tax for the receiver of a gift.
Mom has a 1 million lifetime exclusion for gifting. Therefore if she directly gives her daughter 48k, she will have to file a gift tax return, but there will be no actual tax for her unless she has exceeded her 1 million lifetime exclusion for gifting.
Its not that big of a deal to file a gift tax return if you have not exceeded your lifetime exclusion.
Yes, she is playing fast and loose with the tax laws if she does it the way that she plans, which would be foolish and unnecessary.
However, she could structure it as a loan, and forgive 12k per year of the interest and principal, until its all forgiven, but she would have to report and pay tax on the interest income.