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posted May 31, 2019 5:45:05 PM

If I Give $5000 to each of my children - does it reduce my taxes or increase thiers?

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1 Best answer
Level 15
May 31, 2019 5:45:07 PM

Neither.  A gift given to an individual is not reported on your tax return.  A gift received from an individual is not reported on a tax return, regardless of the amount received.

If the gift given is greater than $14,000 to a single individual, then the gift giver has to report the gift on IRS Form 709.

3 Replies
Level 15
May 31, 2019 5:45:07 PM

Neither.  A gift given to an individual is not reported on your tax return.  A gift received from an individual is not reported on a tax return, regardless of the amount received.

If the gift given is greater than $14,000 to a single individual, then the gift giver has to report the gift on IRS Form 709.

Level 15
May 31, 2019 5:45:09 PM

Form 709 is a Gift Tax return.  "Gift Tax" is somewhat of a misnomer.  Even though a gift tax return may be required, very few people ever actually pay federal gift tax. The purpose of the gift tax return is usually only to document a reduction in the allowable estate tax exemption.
See <a rel="nofollow" target="_blank" href="https://turbotax.intuit.com/tax-tools/tax-tips/Tax-Planning-and-Checklists/The-Gift-Tax-Made-Simple/INF12127.html">https://turbotax.intuit.com/tax-tools/tax-tips/Tax-Planning-and-Checklists/The-Gift-Tax-Made-Simple/INF12127.html</a>

Level 15
May 31, 2019 5:45:13 PM

However, the children can claim their gift as non taxable income for purpose of the sales tax deduction if they itemize.