Loan to my wife was not reported in our tax returns. Is it violation? How to fix now?

[LdiJ]

Many thanks, appreciate.

This forum, specifically Tax sub-forum, is a valuable resource for people looking for advise!

Do I or John need to submit any other tax forms?

No, there would not be any other forms to submit.

 

[henrick5]

many thanks again!

 

[henrick5]

I gave $20,000 to my 50 year old brother as gift in the year 2017. This is the first ever gift I gave him. Do I or my brother need to report this in our 2017 tax returns?

Please note that all the gift amounts together that I ever gave in my lifetime (until now) to all persons together did not exceed $100,000.

 

[Taxing Matters]

I gave $20,000 to my 50 year old brother as gift in the year 2017. This is the first ever gift I gave him. Do I or my brother need to report this in our 2017 tax returns?

Please note that all the gift amounts together that I ever gave in my lifetime (until now) to all persons together did not exceed $100,000.

Under federal tax law, if the total of all the gifts you give to another individual during a single year exceeds $14,000 you must file a federal gift tax return, Form 709. The $14,000 is the federal gift tax exclusion amount. The excess gifts over the $14,000 exclusion is the amount of the gift subject to gift tax, so here the taxable gift is $6,000 (unless you are married and you and your spouse elect to split this gift). The taxable gift first reduces your lifetime unified credit against federal and estate taxes. That credit stands at $5.49 million and goes up a bit each year as it gets indexed every year for inflation. (The $14,000 gift tax exclusion will also eventually get raised for inflation too.) So until you give taxable gifts over your lifetime that exceed the unified credit you pay no federal estate tax. Instead, the taxable gifts just reduce the unified credit, though you still must file a Form 709 to report the taxable gifts. Any unified credit you have left when you die is available to your estate to apply against the federal estate tax.

A very few states have their own gift taxes, and the rules for those state gift taxes are much different than the federal rule. As I do not know in what state you live I do not know if this gift might be subject to a state gift tax.

 

[LdiJ]

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I gave $20,000 to my 50 year old brother as gift in the year 2017. This is the first ever gift I gave him. Do I or my brother need to report this in our 2017 tax returns?

Please note that all the gift amounts together that I ever gave in my lifetime (until now) to all persons together did not exceed $100,000.

If the 20k that you gifted your brother came from a joint bank account you could legitimately consider it a joint gift from you and your wife, with each of you gifting 10k. In that scenario you would not have to file a gift tax return.

 

[quincy]

Under federal tax law, if the total of all the gifts you give to another individual during a single year exceeds $14,000 you must file a federal gift tax return, Form 709. The $14,000 is the federal gift tax exclusion amount. The excess gifts over the $14,000 exclusion is the amount of the gift subject to gift tax, so here the taxable gift is $6,000 (unless you are married and you and your spouse elect to split this gift). The taxable gift first reduces your lifetime unified credit against federal and estate taxes. That credit stands at $5.49 million and goes up a bit each year as it gets indexed every year for inflation. (The $14,000 gift tax exclusion will also eventually get raised for inflation too.) So until you give taxable gifts over your lifetime that exceed the unified credit you pay no federal estate tax. Instead, the taxable gifts just reduce the unified credit, though you still must file a Form 709 to report the taxable gifts. Any unified credit you have left when you die is available to your estate to apply against the federal estate tax.

A very few states have their own gift taxes, and the rules for those state gift taxes are much different than the federal rule. As I do not know in what state you live I do not know if this gift might be subject to a state gift tax.

henrick lives in Florida.

 

[Taxing Matters]

henrick lives in Florida.

No state death or gift taxes in Florida.

 

[henrick5]

Thanks for all your valuable inputs. I have a final query:

My grandfather borrowed $20,000 from me in year 2015 and he paid back that loan $20,000 to me in 2017 (with no interest) and he also gave me a gift $6,000. Except these, there were no (and will be no) financial transactions between us during the years 2015, 2016, or 2017. Whether my grandfather or I need to report anything in our tax returns? Based on one of the previous answers provided by “Tax Matters” “If that gift along with all the other gifts you gave him during the year totaled more than $14,000 then you were required to file a federal gift tax return. Otherwise, the gift part of this is not an issue for you”, it seems to me that we (neither me nor my grandfather) do not need to pay any tax because the interest on $20,000 (for around 2 years) plus the gift amount $6,000 is still below $14,000. But I wish to verify if I am correct.

As I said in my previous posting, all the gifts I ever gave in my life is below $100,00 and the same is true with my grandfather as well.