title>Tax Guru-Ker$tetter Letter Wizard Animation

                 

Tax Guru-Ker$tetter Letter
Saturday, April 22, 2006
 
Reporting Gifts

 

Q:

Subject: Quick Question

I know the gifter doesn't have to file, but does the recipient have to file on a gift that is less than the $11000 limit?  Thank you.


A:

Gifts received are one of the few types of income that are not taxable to the recipient, nor do they have to be reported anywhere.  That applies to gifts of any size, including millions of dollars.

For practical purposes, when a client has received a very large gift or inheritance (another tax free type of income) I have found it useful as a self defense measure to attach a statement explaining the receipt of the gift or inheritance so that IRS will understand why some deductions, such as charitable contributions, are so high compared to the taxable income being reported on that 1040.  To not disclose that fact up front is to invite an audit of the full 1040 when the IRS's screening ratios kick out as suspicious.

FYI:  As of 1/1/06, the current maximum annual gifts before a Gift Tax return is required is $12,000.

I hope this helps.

Kerry Kerstetter

 


- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 4/22/2006 11:21:00 AM Send this post:

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