ATTN Tax Experts: Gift Tax - TME

My knowledge of tax laws is very basic, so I'm reaching out to the OG.  The thread is in regards to the Gift Tax.  Here's what I know:

  1. Each parent can give gifts totaling $14,000 to each offspring per year.  
  2. The parent does not have to pay a tax for anything under this amount.  
  3. This gift is not tax deductible.
  4. The parent does not have to fill out any special tax forms for providing a gift under $14K.
  5. The receiver does not have to claim this gift as income or fill out any special tax forms to receive this gift.
 
  • Anything over $14K per year will be subject to a gift tax.  So if parent provides child with $20K, the parent will have to pay a gift tax on $6K ($20-$14).
  • Parent will have to file a tax document for anything over $14K.  
 
My questions:
  1. If parent provides $20K to the child, would the child claim $6K as personal income?
  2. Why would either party claim a gift transaction to the IRS, if the gift is not tax deductible?  Is their only incentive a moral one? 

ttt

Moaozinho - 


My knowledge of tax laws is very basic, so I'm reaching out to the OG.  The thread is in regards to the Gift Tax.  Here's what I know:




  1. Each parent can give gifts totaling $14,000 to each offspring per year.  


  2. The parent does not have to pay a tax for anything under this amount.  


  3. This gift is not tax deductible.


  4. The parent does not have to fill out any special tax forms for providing a gift under $14K.


  5. The receiver does not have to claim this gift as income or fill out any special tax forms to receive this gift.



 



  • Anything over $14K per year will be subject to a gift tax.  So if parent provides child with $20K, the parent will have to pay a gift tax on $6K ($20-$14).


  • Parent will have to file a tax document for anything over $14K.  



 


My questions:



  1. If parent provides $20K to the child, would the child claim $6K as personal income?


  2. Why would either party claim a gift transaction to the IRS, if the gift is not tax deductible?  Is their only incentive a moral one? 


"Anything over 14K per year will be subject to gift tax"

Not necessarily, annual gifts in excess of $14,000 can be used against an individual's lifetime exemption.

"If parent provides $20,000 to the child. Will the child need to claim 6K as income."

No

"Why would either party claim a gift transaction"

All estate tax returns are audited. Filing gift tax returns gets the statute of limitations on the transaction started.

If ever a thread needed OG'er Death & Taxes.....

"All estate tax returns are audited. Filing gift tax returns gets the statute of limitations on the transaction started."

 

Im confused on this. 

you get roughly a 5.3 million gift tax exclusion for your lifetime

 

you need to file a gift tax return for gifts over $14000 so the IRS can keep a tally of your gifts when completing your estate tax return when you croak

 

if you gift under $14k, you do not need toi file a return and those gifts will not be counted toward your lifetime exclusion of $5.3 mil