topic deductions in Deductions & credits

deductions

caclement — Thu, 15 Apr 2021 15:42:58 GMT

We took $20,000 out of our TD Ameritrade account to give our son and spouce $10,000 each for adoption fees. I was told at the time that the gifts are tax free. However, do I have to declare the $20,000 and do we get credit or exemption for it? Also, how do I report these?

Carol Clement

Re: deductions

DoninGA — Thu, 15 Apr 2021 15:46:02 GMT

Gifts given to an individual and gifts received from an individual are not reported on a tax return.

Since your gift was less than $15,000 to each individual you are not required to report the gifts given on an IRS Form 709.

Re: deductions

Opus 17 — Thu, 15 Apr 2021 16:20:24 GMT

Whenever you have a broker account invested in stocks, bonds, mutual funds etc., you should get a series of statements or a combined statement at the end of the year reporting your taxable income; a 1099-B, 1099-DIV, maybe a 1099-INT. You pay income tax on certain interest and dividends, and capital gains that were realized during the year. When you sell investments to withdraw cash, that realizes or locks in some gains (if you sold the investments for more than you paid) or you will take a loss (if you sold the investments for less than you paid) and all that gets reported on your tax return at the end of the year in the usual way.

Then, whatever you do with the money after that, is completely separate from the process of cashing it out.