IRA

Forum|Forum|5 years ago
October 13, 2020
2 replies
4 views

If I take a cash disbursement from my IRA, and give that money to my son to buy a house, do I still pay the full income tax on that money?

macuser_22

Alumni - Champ

Yes. The tax applies reguardless of what you do with the money.

If you are under age 59 1/2 then there could be an additional 10% early distribution penalty that might be waived for the first $10,000 if the money is used to purchase a first home and all of the other conditions are met.

This assumes you are asking about a Traditional IRA and not a Roth. For a Roth, you can always withdrew your own prion contribution tax and penalty free. The tax and penalty applies to any earnings that are withdrawn.

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

DoninGA

Level 15

do I still pay the full income tax on that money? YES.

Even if you were using the IRA distribution for your own house the distribution is taxable.

xmasbaby0

Level 15

GIFTS

Money that you receive as a gift is not taxable income to you, and you do not need to report it on your income tax return. Money that you gave as a gift to someone else is not deductible for your taxes.

Turbo Tax does not support the gift tax form 709, but here is a link:

https://www.irs.gov/pub/irs-pdf/f709.pdf

https://turbotax.intuit.com/tax-tips/estates/the-gift-tax-made-simple/L5tGWVC8N

https://www.forbes.com/sites/ashleaebeling/2017/10/19/irs-announces-2018-estate-and-gift-tax-limits-11-2-million-per-couple/#3226e75d4a4b

**Disclaimer: Every effort has been made to offer the most correct information possible. The poster disclaims any legal responsibility for the accuracy of the information that is contained in this post.**