Are excess gifts given exempt if the giver lives more than 7 years after giving the gift..or how does it work?

[xmasbaby0]

We do not know what you mean by "excess gifts" --- or what you think you mean.  Exempt from WHAT exactly?

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-...

[21norman02]

by excess I mean more than the $15K permitted.  If, for example $30K is given in one year, but the giver lives more than 7 years later, is the $30K gift exempt?

[xmasbaby0]

Not sure where you are getting anything about seven years.   What is making you think there is a seven year "thing?"   The rules are clear----you can give a gift of up to $15,000 to an individual in a calendar year without having to file a gift tax form 709.   If you give more than the $15,000 you are supposed to fill out a Form 709.   Unless you have exceeded the lifetime gift amount of over $11 million, you do not pay any tax on the gift but you are supposed to fill out the tax form anyway.

[xmasbaby0]

https://www.irs.gov/pub/irs-pdf/i709.pdf

[xmasbaby0]

@21norman02 You have posted several questions in the user forum about the gift tax, and seem confused about it.   TurboTax cannot complete a Form 709 since the gift tax forms are not income tax forms.   If you have somehow "messed up" and given a gift in excess of the annual amount, seek some local paid tax help to sort it out.

[21norman02]

I understand it is the "7 year rule" whereby no tax is due on any gifts you give if you live for 7 years after giving them...unless it's part of a trust.  At least that's what I have read.

[xmasbaby0]

You have asked lots of questions about this including questions about repaying the "gift"----please seek paid advice.   We do not know if you have already given a gift and are now trying to "fix" a mistake or if you are currently contemplating giving a gift and hoping to live for seven more years.   Get some real-time, in person tax advice.

[Opus 17]

Please keep your questions to one place.

https://ttlc.intuit.com/community/taxes/discussion/is-an-excess-gift-amount-taxable-if-the-gift-is-e...

[Opus 17]

---

@21norman02 wrote:

I understand it is the "7 year rule" whereby no tax is due on any gifts you give if you live for 7 years after giving them...unless it's part of a trust.  At least that's what I have read.

---

The only 7 year rule I can find is in the UK.  You are asking about the United States, aren't you?

An inheritance tax taxes the transfer of assets from the deceased to the heirs, and the heirs pay the tax.  In the US, there is no federal inheritance tax.  

An estate tax taxes the value of the deceased person's estate before the assets are distributed to the heirs, and the estate pays the tax.  In the US, there is an $11 million exemption on the estate and gift tax.  A person can give (while alive) or leave (in death) up to $11 million without paying estate tax.  If the lifetime value of their gifts plus their estate is more than $11 million, they will pay estate or gift tax.  Form 709 does not charge tax for gifts over $15,000, it only records them so the IRS can track the gift against the person's lifetime maximum.  There is no "7 year rule" in the US.  If a person gives away more than $11 million in their lifetime, they will pay gift tax immediately whenever their gifts go over the limit.  For example, if you had $20 million sitting in a bank account, and you gave away $2 million per year over the next 10 years, you would pay gift tax in years 6-10, once your gifts were over the $11 million lifetime exclusion.  The recipient never pays tax on a gift. 

[xmasbaby0]

The other thought that occurs to me-----are you somehow confusing this with the five year lookback rule for money/assets you give away before going on Medicaid?   If you are giving away money in the expectation of long term care in a nursing home, etc. and expecting the care to be paid for by Medicaid, there is a five year clawback on money you give away.   So again---consult an elder care attorney or get some professional tax advice.

[Opus 17]

---

@xmasbaby0 wrote:

The other thought that occurs to me-----are you somehow confusing this with the five year lookback rule for money/assets you give away before going on Medicaid?   If you are giving away money in the expectation of long term care in a nursing home, etc. and expecting the care to be paid for by Medicaid, there is a five year clawback on money you give away.   So again---consult an elder care attorney or get some professional tax advice.

---

And if so, this is not a tax, and is not administered by the IRS.  It is an eligibility rule for Medicaid and is run by Medicaid.  

[tagteam]

---

@Opus 17 wrote:
The recipient never pays tax on a gift. 

---

Section §6324(b) imposes gift tax liability on the donee (recipient) to the extent any gift tax due is not paid by the donor.

[Opus 17]

@tagteam 

Good to know.  Don’t accept large gifts from tax cheats.  

[tagteam]

---

@Opus 17 wrote:

@tagteam 

Good to know.  Don’t accept large gifts from tax cheats.  

---

The gift does not have to be large and the donor's failure to pay could be entirely inadvertent and unintentional.

Liability is joint and several meaning if the donor gives one individual $20 million and gives you $1,000 in the same tax year, the IRS could decide to pursue you for any unpaid gift tax by the donor (up to the $1,000 you received).