Does Monetary gift count toward my yearly income?

[EJNich1]

I received $25K bonus gift that the giver already paid tax on. Will I have to report this as part of my income for next years taxes?

[tagteam]

You need to elaborate.

What were the circumstances surrounding the gift?

What do you mean by the term "bonus gift"? Was this in connection with employment or services rendered?

[PatriciaV]

In general, gifts are not taxable to the recipient as long as there is nothing given in return. The donor is generally responsible for paying the gift tax.

[EJNich1]

Our company was sold to new owners and our previous owner distributed the profit of that sale to its employees. So it was considered a bonus gift

[tagteam]

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@EJNich1 wrote:

Our company was sold to new owners and our previous owner distributed the profit of that sale to its employees. So it was considered a bonus gift

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Yes, that sounds like it would be fully taxable as compensation of sorts rather than an actual gift.

The funny thing is there is a case almost exactly on point with your scenario and with exactly the same dollar amount.

See https://irstaxtrouble.com/is-a-gift-to-a-former-employee-taxable/

[EJNich1]

Ok, even though the owner paid all the tax on it already? It was gross $38K, they paid taxes on it to get it to the net $25K that I received. I still have to consider it taxable income after all that?

[tagteam]

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@EJNich1 wrote:

Ok, even though the owner paid all the tax on it already? It was gross $38K, they paid taxes on it to get it to the net $25K that I received. I still have to consider it taxable income after all that?

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Probably. Did you read the article and case at the link above? Almost the same fact pattern.

Also, everyone who gives a gift to another individual has already paid taxes on the amount given (i.e., there is really no such thing as a "pre-tax gift") and, importantly, this gift is being given by a former employer to former employees so a business relationship had already been established.

[tagteam]

One more thing; you might want to (at the very least) wait until next year (February - March, 2025) and see if you get some sort of tax reporting statement, such as a 1099-MISC. If you do, then there is absolutely no question that you will have to report it as income.