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max amount a parent can give a child as gift without it bein

 
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cooltiffanie



Joined: 25 Aug 2007
Posts: 1

PostPosted: Wed Jun 25, 2003 3:11 pm    Post subject: max amount a parent can give a child as gift without it bein Reply with quote

How much could parents give their child without it being
taxed and does it make any difference if the money is coming
from overseas. Does it make a difference tax wise if it goes
to a US citizen or non US citizen (the parents are non US
citizens living 100% of time in Europe).

We're looking at a figure of about 60K. if there is a tax
applied as s gift at what level does it become taxable and
is it still taxable if the money comes from a joint account
owned by parent and child. And if the latter, does the money
have to be in the account for a minimum amount of time.

I'm totally confused! hearing multiple versions of what are
the facts!

Thank you!

Jasmine

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Phil Marti



Joined: 25 Aug 2007
Posts: 1266

PostPosted: Fri Jun 27, 2003 9:35 am    Post subject: Re: max amount a parent can give a child as gift without it Reply with quote

cooltiffanie@hotmail.com (cooltiffanie) writes:

> How much could parents give their child without it being
> taxed and does it make any difference if the money is coming
> from overseas. Does it make a difference tax wise if it goes
> to a US citizen or non US citizen (the parents are non US
> citizens living 100% of time in Europe).

I don't understand how "gifts are not taxable income" could
get any clearer. See IRS Publication 525.

The US is pretty uppity, but we haven't gotten so bad that
we try to impose our gift tax law on people who are neither
citizens nor residents. IOW, there is no US tax consequence
to this transaction, regardless of amount or status of the
recipients.

If there's some sort of transaction reporting required, the
recipient's bank will advise.

Phil Marti
Topeka, KS

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L K Williams



Joined: 25 Aug 2007
Posts: 59

PostPosted: Fri Jun 27, 2003 9:35 am    Post subject: Re: max amount a parent can give a child as gift without it Reply with quote

"cooltiffanie" wrote:

> How much could parents give their child without it being
> taxed and does it make any difference if the money is coming
> from overseas. Does it make a difference tax wise if it goes
> to a US citizen or non US citizen (the parents are non US
> citizens living 100% of time in Europe).
>
> We're looking at a figure of about 60K. if there is a tax
> applied as s gift at what level does it become taxable and
> is it still taxable if the money comes from a joint account
> owned by parent and child. And if the latter, does the money
> have to be in the account for a minimum amount of time.
>
> I'm totally confused! hearing multiple versions of what are
> the facts!

If you are not U.S. citizens or permanent residents
(greencard holders) there is no tax. Gift taxes are imposed
on the donor, not the donee -- it is a tax on the right to
transfer property to another. If you are not otherwise
subject to U.S. taxes, the IRS has no jurisdiction to
collect a tax from you.

Your child is not liable for any tax on the gift but will
have ro report and pay tax on any income from the money
(dividends or interest from investing the money).

If the money is in a joint account and the child already is
an owner, there is no gift when he or she withdraws money
from the account. There could have been a gift at the time
the account was created or the child's name was added,
however. Even so, if the parents were not subject to U.S.
taxes when that happened, no tax would have applied then,
either.

--
L K Williams, C P A
Nawarat, Williams & Co
Income Tax Services for Expatriate Americans

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Stuart O. Bronstein



Joined: 25 Aug 2007
Posts: 56

PostPosted: Fri Jun 27, 2003 9:54 am    Post subject: Re: max amount a parent can give a child as gift without it Reply with quote

cooltiffanie@hotmail.com (cooltiffanie) blurted out

> How much could parents give their child without it being
> taxed and does it make any difference if the money is coming
> from overseas.

It depends on wht you mean by "being taxed." If you mean
actually being required to pay money out in tax based on the
gift, each person has a lifetime exemption of $1,000,000.
So each parent can give that much to a child (including all
prior gifts to any person at any time in excess of the
annual exemption amount) without actually having to *pay*
any tax.

If you mean "incur" a tax, the answer is different. Each
person can make gifts of up to $11,000 (this year - it may
go up in the future) to any other person. As long as the
gift is not in trust, no gift tax return will be required,
and the amount of the gift will not be deducted from the
donor's lifetime exemption.

It doesn't make any difference if the money is coming from
overseas. However if the donor is not a US citizen and does
not reside here, I don't think the tax will apply.

> Does it make a difference tax wise if it goes
> to a US citizen or non US citizen (the parents are non US
> citizens living 100% of time in Europe).

Not unless it's a non-citizen spouse of the donor.

> We're looking at a figure of about 60K. if there is a tax
> applied as s gift at what level does it become taxable and
> is it still taxable if the money comes from a joint account
> owned by parent and child. And if the latter, does the money
> have to be in the account for a minimum amount of time.

How many donors are there, and how many donees? Two parents
can give three kids $66,000 in any year and have it fall
within the annual exemption amount.

If you are talking about two parents and one child, for
exemple, a gift of $60,000 (not in trust) will require a
gift tax return and incurring (but likely not yet paying) a
gift tax on $38,000.

That $38,000 would be divided between the spouses, so that
each will have $19,000 deducting from his lifetime
exemption. When the total of all gifts made during life (in
excess of the annual exemption amount) exceed $1,000,000,
then gift tax will have to start actually being paid.

If the lifetime exemption amount is not reached during your
life, the amount of all past taxable gifts will be deducted
from the lifetime exemption available to your estate for
estate tax purposes, the same $1,000,000.

That's kind of a mess to figure out. Sit down with your
accountant and tax attorney to figure out the best way to
handle the transaction.

Stu

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Herb Smith



Joined: 25 Aug 2007
Posts: 561

PostPosted: Fri Jun 27, 2003 10:13 am    Post subject: Re: max amount a parent can give a child as gift without it Reply with quote

cooltiffanie@hotmail.com (cooltiffanie) wrote:

> How much could parents give their child without it being
> taxed and does it make any difference if the money is coming
> from overseas. Does it make a difference tax wise if it goes
> to a US citizen or non US citizen (the parents are non US
> citizens living 100% of time in Europe).
>
> We're looking at a figure of about 60K. if there is a tax
> applied as s gift at what level does it become taxable and
> is it still taxable if the money comes from a joint account
> owned by parent and child. And if the latter, does the money
> have to be in the account for a minimum amount of time.
>
> I'm totally confused! hearing multiple versions of what are
> the facts!

The giftee is not subject to income or gift tax. The non-US
citizen parents are not subject to US gift tax rules.

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Drewremedy



Joined: 25 Aug 2007
Posts: 81

PostPosted: Fri Jun 27, 2003 10:32 am    Post subject: Re: max amount a parent can give a child as gift without it Reply with quote

>
> How much could parents give their child without it being
> taxed and does it make any difference if the money is coming
> from overseas. Does it make a difference tax wise if it goes
> to a US citizen or non US citizen (the parents are non US
> citizens living 100% of time in Europe).
>
> We're looking at a figure of about 60K. if there is a tax
> applied as s gift at what level does it become taxable and
> is it still taxable if the money comes from a joint account
> owned by parent and child. And if the latter, does the money
> have to be in the account for a minimum amount of time.
>
> I'm totally confused! hearing multiple versions of what are
> the facts!

A non US citizen not subject to US taxes can give all they
want as a gift to a US citizen. No caps.

It may not make sense to give megabucks to a kid and it may
involve using a custodial account which has some control
problems when kdi hits age 21 (typical age) plus assets in
a kids name are essentially fatal to any college financial
aid. (Look at Section 529 plans to get around this)

Otherwise the gift tax free window is $22,000 per set of
parents to each kid per year--and even if you go above that
you don't hit actual gift tax territory until you get noerth
of $1 million.

There are some technical reporting requirements to bring
large sums of cash into US --don't mess about --there are
big penalities for nonreporting--but checks and other
instruements are OK. I think its 100K mimimum to require a
report but don't take my word for it.

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