Attorney Retainer Fee I paid directly to a Lawyer on behalf of my grown daughter

[Robfoss61]

Hello, Last November I wired $50k directly to my grown daughter's attorney to help pay a portion of a legal retainer for a personal matter involving my daughter. She advised me yesterday that the lawyer returned $20k of that sum directly to her. My daughter is looking to reimburse me the $20k portion at this time. If she pays me the $20k, will this cause a concern with my bank and in turn, will the payment be reported to the IRS by the bank? If so, how will this play out; how best for me to handle going forward? A few folks had chipped in to help with the retainer, so I guess counsel simply refunded some of the retainer fees paid back directly to my daughter vs specific individuals; I would have preferred the reimbursement come to me directly from the attorney as the paper trail would have been cleaner. Am I over thinking this? Many thanks.

[DianeW777]

Money you gave to your daughter is not reported on your tax return and likewise, any money received from your daughter is not included as taxable income on your tax return. 

When you gave your daughter money that could have been considered a gift, unless you had documents drawn up for her to repay it as a loan.

The annual gift exclusion for 2024 is $18,000. If you are married, the the gift splitting would come into play and the amount would be $36,000. If you don't meet this, and there is no loan, then you should file a gift tax return for 2024, however there should not be any tax liability because there is a lifetime exclusion.

• The 2024 lifetime gift exemption is $13.61 million. Because the exemption is per person, married couples can exclude double that — $27.22 million — in lifetime gifts. 

This forum does not provide additional information about gift tax returns.

[Bsch4477]

If she returns 20K and paid 50K on her behalf you gave her a 30K gift. You would file a form 709 and mail it to the IRS. There are no bank issues. If the gift came from you and your spouse the gift is within the annual gift giving limit and nothing has to be done.