How can we give this gift to our daughter properly?

[danilol]

My husband and I want to buy a used car for my daughter for her new job. This car costs$ 20,000. I know gift limit for 2022 is $16000/person. So my husband and I together can give up to $32000 without fill any form when we file the tax.

The checking account which we will use to pay the car is a joint checking account between my husband and I.

By writing out this check to buy the car, I will use up my gift limit while part of my husband's gift limit.

Do we need to write a gift letter to my daughter and keep record or it does not matter because it is under gift limit for 2 persons( my husband and I).

And I know we no need to fill any form when we file married jointly tax return in 2022, am I correct?

[rjs]

If you write a check to the dealer to buy the car, the check is not the gift. You are giving the check to the dealer, not to your daughter. So it doesn't matter what kind of account the check comes from, who writes it, or how much it's for.

The actual gift is the car. You and your husband can't each give her half the car. There's only one car, and it's worth $20,000. Your income tax return is not the issue. Gifts don't go on your income tax return. To stay under the $16,000 annual exclusion you would have to file a gift tax return, Form 709, to split the gift. This is completely separate from your income tax return. You would not have to pay any gift tax unless you have previously made gifts totaling more than $12 million over your lifetime, but you have to file the return. You cannot file a gift tax return with TurboTax.

A "gift letter" would not accomplish anything. The only way to split a gift is to file a gift tax return.

If you want to avoid filing a gift tax return, you and your husband could each give your daughter $10,000, in two separate checks, one from each of you, and let her buy the car. Then you are each making a gift of less than $16,000. It doesn't matter if the two checks come from the same joint account, as long as each of you writes and signs a separate check. The checks have to be payable to your daughter, not to the car dealer.

[Mike9241]

I hope your daughter is a responsible person. Once you gift her the money it's hers. she has the right to do with it as she pleases. buy the vehicle or spend on jewelery or a trip around the world. 

[danilol]

She will buy car for her commute.

[danilol]

I like your ideal to avoid filing gift tax return and no need to write gift letter.

I and my husband will write and sign a check of $10000 each and make it payable to my daughter.

Please let me know whether I understand you correctly and do this thing correctly?

Thanks

[rjs]

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@danilol wrote:

Please let me know whether I understand you correctly and do this thing correctly?

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@danilol  I assume you are replying to me. You do seem to understand me correctly. It is not likely to ever be questioned, but just in case, keep good records. Keep copies of the two checks. You should be able to get copies of the canceled checks from your bank. Also keep a statement or other record from your daughter's bank account showing the two $10,000 deposits.

[danilol]

@rjs 

Sorry, I have further  questions. I hope it won't bother you.

Let me restate in this way.

My husband and I want to give out total $20,000 to my daughter let her buy her car. We want to do it correctly. We do not want to file gift tax return. We do not want to write checks.

My daughter has a joint account with me, let's say account A.

I have my own account, let's say account B

I have joint account with my husband, Let's say account C.

Now my husband transfers $10,000 from account C as his gift to my daugher to account A.

I transfer $10, 000 as my gift from either account B or account C to my daughter to account A.

After account A receive these two deposit, as joint owner of account A, my daughter can get a cashier check from the bank to buy her car.

Will this fine or will cause any trouble? 

My daughter does not have her solely owned checking account yet and I do not want to mail out a fat check if I do n't have to do that.

This is the reason why I want to know whether the above way works

Thanks

[rjs]

That account arrangement does create complications. I'm not an expert on these rules, but I don't think what you want to do will work. It seems to me that any money that's deposited in account A is assumed to be half yours, at least in the absence of any other evidence. I think writing checks, rather than doing electronic transfers, would solve the problem, even if your daughter deposits the checks in her joint account with you. If your daughter is not nearby and you're worried about mailing checks, send them by registered mail or by FedEx. You can insure them for the total value.

You might want to consult a local tax professional or tax lawyer. You can also see if anyone else posts a different opinion here.

[danilol]

Thank you.