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I-Coop
Level 1

GiftTax

I opened a joint bank account with my daughter and transferred $40,000 from one of my accounts into it.  When I realized it would be considered a gift and above the maximum allowed, I transferred $25,000 out to a personal account of mine, leaving only $15,000 in account.  All done the same year.  Do I have to declare on my return? 

1 Best answer

Accepted Solutions
Opus 17
Level 15

GiftTax

First, gifts are reported on a separate form called Form 709.  It's not part of your tax return and Turbotax does nt prepare this form, although it has the same deadline (April 15).

 

Second, gifts over $15,000 per per per year must be reported, but are not actually taxed unless the total of your lifetime gifts and estate is more than $11 million.  Gifts are never "not allowed", it's just that you have to make a report for larger gifts.

 

Third, in this case I would say that in the end, the "gift" is $15,000 and no form 709 is needed (although you are worrying for nothing).  A true gift can't have strings attached.  If you could take back 2/3 of the money, then it did have strings attached and the net gift amount is just the $15,000 remaining.

 

Fourth, if your daughter is a minor, you need to read up on the Uniform Gift to Minors Act, and special rules for taxation of a child's investment income.  

https://www.irs.gov/taxtopics/tc553

https://www.nerdwallet.com/article/investing/utma-ugma

 

If you made this gift for some other reason than just giving money to help a family member (like estate planning, or reducing the tax on your own investments) you may want the advice of a professional financial planner. 

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*

View solution in original post

5 Replies
xmasbaby0
Level 15

GiftTax

No you do not enter anything about that on your income tax return.   Gifts are not entered on your income tax return.

 

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-...

**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.**
Opus 17
Level 15

GiftTax

First, gifts are reported on a separate form called Form 709.  It's not part of your tax return and Turbotax does nt prepare this form, although it has the same deadline (April 15).

 

Second, gifts over $15,000 per per per year must be reported, but are not actually taxed unless the total of your lifetime gifts and estate is more than $11 million.  Gifts are never "not allowed", it's just that you have to make a report for larger gifts.

 

Third, in this case I would say that in the end, the "gift" is $15,000 and no form 709 is needed (although you are worrying for nothing).  A true gift can't have strings attached.  If you could take back 2/3 of the money, then it did have strings attached and the net gift amount is just the $15,000 remaining.

 

Fourth, if your daughter is a minor, you need to read up on the Uniform Gift to Minors Act, and special rules for taxation of a child's investment income.  

https://www.irs.gov/taxtopics/tc553

https://www.nerdwallet.com/article/investing/utma-ugma

 

If you made this gift for some other reason than just giving money to help a family member (like estate planning, or reducing the tax on your own investments) you may want the advice of a professional financial planner. 

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*

View solution in original post

I-Coop
Level 1

GiftTax

Thanks for Information

Hal_Al
Level 15

GiftTax

I'm of the opinion that gift has not been made until your daughter spends or withdraws money from the joint account. The amount she uses for herself determines the gift amount for purposes of the rule for filing a gift tax return. 

Opus 17
Level 15

GiftTax

@Hal_Al 

That’s kind of why I was getting out the reason for the establishment of the account.  After my mother passed away, my father made me a joint owner of his main checking account. This was mainly for financial management purposes and there was no intention either by me or him, that I would be spending the money.

 

However in this case, the account was newly established for some purpose.  I would say that if the intention is that the money belongs to the daughter for the daughter‘s free use, then it is a gift now even if the daughter has not withdrawn it. If it was a gift to a minor for investment purposes, or something else, we would need more information.

 

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
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