title>Tax Guru-Ker$tetter Letter Wizard Animation

                 

Tax Guru-Ker$tetter Letter
Saturday, February 09, 2008
 
Reporting Gifts


Q:



Subject: Cash Gifts


My 90 year old grandfather has been giving my brother and I $11,000 each for the past 2 years. I do his taxes but have not been showing these payments on his tax return as he does not itemize. How do I show these as cash gifts? Do I have to itemize to do this?

 

Thanks for any advice or tips you may have.

 


A:



Gifts are not shown anywhere on income tax returns, either for the giver or the recipient.  They are not deductible by the giver, nor are they taxable income to the recipients.

The Gift Tax system is actually separate from the income tax system.  If your grandfather were to give any single person more than $12,000 during a calendar year, he would have to file a Gift Tax return (Form 709).  There are exceptions for certain other kinds of expenses, such as medical and education costs.

If he starts giving away more than the annual $12,000 tax free limit, he should be working with a qualified professional tax advisor.

You can see more about the Gift Tax on my website. 

Good luck.

Kerry Kerstetter


 


 

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- posted by Kerry M. Kerstetter, MBA~CPA~ATP~ATA @ 2/09/2008 08:03:00 PM Send this post:

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