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College Student-need help (gift/income tax?)

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needhelp12313

Junior Member
What is the name of your state? NJ

I am currently a freshman in college, and have a problem. In the fall of last year (2007), my mom gave me about $10,000 to invest (she wants to teach me). Would this incur a gift tax?

I already deposited them into several mutual funds. My mom doesn't work, so she has no income.

Also, would I have to report this amount ($10,000) as income on the tax forms? My main concern is the fact that this may affect my financial aid eligibility for college next year.

And would I have to include the $10,000 as an asset on my financial aid forms?

Thanks
 


anteater

Senior Member
Would this incur a gift tax?
No. A person can gift up to $12,000 each year to as many people as he/she wishes without incurring any obligation to report the gift to the IRS. And each person has a $1M lifetime reportable gift exclusion. Even if the gift had been greater than $12,000 and your mother did have to report the gift, it is unlikely that she would have to pay gift tax.

Also, would I have to report this amount ($10,000) as income on the tax forms?
No, a gift is not income. If the mutual fund makes any dividend or capital gains distributions, then you would receive a Form 1099 and have to report those as income. Or, if you sell the fund(s), you might have capital gains income.

And would I have to include the $10,000 as an asset on my financial aid forms?
Since it was a gift, the assets are your's and it is likely you will have to include them on financial aid applications.
 

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