Gift to Son and Effect on Gift Tax

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WolfgangPauli
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Gift to Son and Effect on Gift Tax

Post by WolfgangPauli » Mon May 28, 2018 5:54 pm

Hi,

I plan on gifting two things to my son this year:

1. Pay off the remainder of student loans ($30k).
2. Give him a car (used that I do not use anymore) ($13K)

I have already paid $20K in loans for him so in total I will give him (I say "I" but it is my wife and I) roughly $63K this year.

My understanding is there are just some forms I fill out and this goes against my lifetime giving so there is no gift tax? Is that true?

Please... No parenting advice.. this is what is right for us.. please let me know about the taxes.

Thanks

Kevin
Twitter: @JAXbogleheads | EM: JAXbogleheads@gmail.com

Gill
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Re: Gift to Son and Effect on Gift Tax

Post by Gill » Mon May 28, 2018 6:08 pm

Nothing to it. File IRS Form 709 and report the gifts. Yes, no tax due.
Gill

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FiveK
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Re: Gift to Son and Effect on Gift Tax

Post by FiveK » Mon May 28, 2018 7:47 pm

Gill wrote:
Mon May 28, 2018 6:08 pm
Nothing to it. File IRS Form 709 and report the gifts.
+1

WP, note that "just in case" you may want to split the gifts 50/50 from you and your wife. Or it may not matter.

delamer
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Re: Gift to Son and Effect on Gift Tax

Post by delamer » Mon May 28, 2018 7:53 pm

Gill wrote:
Mon May 28, 2018 6:08 pm
Nothing to it. File IRS Form 709 and report the gifts. Yes, no tax due.
Gill
Are the two gifts that the OP is planning considered gifts by the IRS if his son is a dependent for tax purposes?

sport
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Re: Gift to Son and Effect on Gift Tax

Post by sport » Mon May 28, 2018 8:10 pm

Is it a gift if the money is paid on the loans directly rather than giving the money to the son to pay them off?

Gill
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Re: Gift to Son and Effect on Gift Tax

Post by Gill » Mon May 28, 2018 8:24 pm

delamer wrote:
Mon May 28, 2018 7:53 pm
Gill wrote:
Mon May 28, 2018 6:08 pm
Nothing to it. File IRS Form 709 and report the gifts. Yes, no tax due.
Gill
Are the two gifts that the OP is planning considered gifts by the IRS if his son is a dependent for tax purposes?
Yes
Gill

Gill
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Re: Gift to Son and Effect on Gift Tax

Post by Gill » Mon May 28, 2018 8:25 pm

sport wrote:
Mon May 28, 2018 8:10 pm
Is it a gift if the money is paid on the loans directly rather than giving the money to the son to pay them off?
Yes.
Gill

delamer
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Re: Gift to Son and Effect on Gift Tax

Post by delamer » Mon May 28, 2018 8:29 pm

Gill wrote:
Mon May 28, 2018 8:24 pm
delamer wrote:
Mon May 28, 2018 7:53 pm
Gill wrote:
Mon May 28, 2018 6:08 pm
Nothing to it. File IRS Form 709 and report the gifts. Yes, no tax due.
Gill
Are the two gifts that the OP is planning considered gifts by the IRS if his son is a dependent for tax purposes?
Yes
Gill
Thanks. How are the payments for undergraduate college expenses out of parental funds treated, in terms of gifts, by the IRS?

Gill
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Re: Gift to Son and Effect on Gift Tax

Post by Gill » Mon May 28, 2018 8:32 pm

delamer wrote:
Mon May 28, 2018 8:29 pm
Gill wrote:
Mon May 28, 2018 8:24 pm
delamer wrote:
Mon May 28, 2018 7:53 pm
Gill wrote:
Mon May 28, 2018 6:08 pm
Nothing to it. File IRS Form 709 and report the gifts. Yes, no tax due.
Gill
Are the two gifts that the OP is planning considered gifts by the IRS if his son is a dependent for tax purposes?
Yes
Gill
Thanks. How are the payments for undergraduate college expenses out of parental funds treated, in terms of gifts, by the IRS?
They are taxable gifts unless paid direct to the institution.
Gill

Spirit Rider
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Re: Gift to Son and Effect on Gift Tax

Post by Spirit Rider » Mon May 28, 2018 9:09 pm

Gill wrote:
Mon May 28, 2018 8:32 pm
delamer wrote:
Mon May 28, 2018 8:29 pm
Thanks. How are the payments for undergraduate college expenses out of parental funds treated, in terms of gifts, by the IRS?
They are taxable gifts unless paid direct to the institution.
Or legitimate parental support obligations of a dependent.

jerryk68
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Re: Gift to Son and Effect on Gift Tax

Post by jerryk68 » Tue May 29, 2018 3:17 pm

Any spouses? You can give him $15k, your wife can give him $15k. If your son has a wife then you give her $15k and your wife gives her $15k. You could "lend " him the car until January 1st where upon you gift him the car next year. It's the gift lotto. I play it all the time.

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tadamsmar
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Re: Gift to Son and Effect on Gift Tax

Post by tadamsmar » Tue May 29, 2018 3:47 pm

jerryk68 wrote:
Tue May 29, 2018 3:17 pm
Any spouses? You can give him $15k, your wife can give him $15k. If your son has a wife then you give her $15k and your wife gives her $15k. You could "lend " him the car until January 1st where upon you gift him the car next year. It's the gift lotto. I play it all the time.
If you loan the car to avoid filling out the gift tax form, then you need to charge the IRS minimum interest rate and write up a short loan agreement. I think you should both sign it, you definitely need to document the loan to be kosher with the IRS rules. You can gift him the interest, you just need to keep the gift below the $15k/year limit multiplied by 1 or 2 or 4 depending on the spousal combinatorics.

You probably need to put him on your insurance if you loan him the car. Probably best to just give him the car first if you can and get out of owning it and loan the money.

Even if there are no spouses, you can look up the minimum IRS rate on loans and loan him the money at the minimum rate. Then over 5 years
you can gift him the interest and the money for a total of 63k plus some interest, 15k per year. You need to write a short loan agreement get it signed and keep it in your records.

I personally think this may be easier than filling out the gift tax irs form 702, at least for the first time, I found it to be a bit of a bear. And you need to keep records of the form for your lifetime.

Gill
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Re: Gift to Son and Effect on Gift Tax

Post by Gill » Tue May 29, 2018 6:07 pm

tadamsmar wrote:
Tue May 29, 2018 3:47 pm
jerryk68 wrote:
Tue May 29, 2018 3:17 pm
Any spouses? You can give him $15k, your wife can give him $15k. If your son has a wife then you give her $15k and your wife gives her $15k. You could "lend " him the car until January 1st where upon you gift him the car next year. It's the gift lotto. I play it all the time.
If you loan the car to avoid filling out the gift tax form, then you need to charge the IRS minimum interest rate and write up a short loan agreement. I think you should both sign it, you definitely need to document the loan to be kosher with the IRS rules. You can gift him the interest, you just need to keep the gift below the $15k/year limit multiplied by 1 or 2 or 4 depending on the spousal combinatorics
You are kidding about this, aren’t you?
Gill

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tadamsmar
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Re: Gift to Son and Effect on Gift Tax

Post by tadamsmar » Wed May 30, 2018 7:31 am

Gill wrote:
Tue May 29, 2018 6:07 pm
tadamsmar wrote:
Tue May 29, 2018 3:47 pm
jerryk68 wrote:
Tue May 29, 2018 3:17 pm
Any spouses? You can give him $15k, your wife can give him $15k. If your son has a wife then you give her $15k and your wife gives her $15k. You could "lend " him the car until January 1st where upon you gift him the car next year. It's the gift lotto. I play it all the time.
If you loan the car to avoid filling out the gift tax form, then you need to charge the IRS minimum interest rate and write up a short loan agreement. I think you should both sign it, you definitely need to document the loan to be kosher with the IRS rules. You can gift him the interest, you just need to keep the gift below the $15k/year limit multiplied by 1 or 2 or 4 depending on the spousal combinatorics
You are kidding about this, aren’t you?
Gill
Not kidding. An undocumented loan is a gift according to IRS rules. A loan with interest below the AFR is a gift according to IRS rules.
Last edited by tadamsmar on Wed May 30, 2018 7:33 am, edited 1 time in total.

Gill
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Re: Gift to Son and Effect on Gift Tax

Post by Gill » Wed May 30, 2018 7:32 am

tadamsmar wrote:
Wed May 30, 2018 7:31 am
Gill wrote:
Tue May 29, 2018 6:07 pm
tadamsmar wrote:
Tue May 29, 2018 3:47 pm
jerryk68 wrote:
Tue May 29, 2018 3:17 pm
Any spouses? You can give him $15k, your wife can give him $15k. If your son has a wife then you give her $15k and your wife gives her $15k. You could "lend " him the car until January 1st where upon you gift him the car next year. It's the gift lotto. I play it all the time.
If you loan the car to avoid filling out the gift tax form, then you need to charge the IRS minimum interest rate and write up a short loan agreement. I think you should both sign it, you definitely need to document the loan to be kosher with the IRS rules. You can gift him the interest, you just need to keep the gift below the $15k/year limit multiplied by 1 or 2 or 4 depending on the spousal combinatorics
You are kidding about this, aren’t you?
Gill
Not kidding. An undocumented loan and a no-interest loan is a gift according to IRS rules.
Yes, I know, but lending a car to your son?
Gill

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tadamsmar
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Re: Gift to Son and Effect on Gift Tax

Post by tadamsmar » Wed May 30, 2018 7:38 am

Gill wrote:
Wed May 30, 2018 7:32 am
tadamsmar wrote:
Wed May 30, 2018 7:31 am
Gill wrote:
Tue May 29, 2018 6:07 pm
tadamsmar wrote:
Tue May 29, 2018 3:47 pm
jerryk68 wrote:
Tue May 29, 2018 3:17 pm
Any spouses? You can give him $15k, your wife can give him $15k. If your son has a wife then you give her $15k and your wife gives her $15k. You could "lend " him the car until January 1st where upon you gift him the car next year. It's the gift lotto. I play it all the time.
If you loan the car to avoid filling out the gift tax form, then you need to charge the IRS minimum interest rate and write up a short loan agreement. I think you should both sign it, you definitely need to document the loan to be kosher with the IRS rules. You can gift him the interest, you just need to keep the gift below the $15k/year limit multiplied by 1 or 2 or 4 depending on the spousal combinatorics
You are kidding about this, aren’t you?
Gill
Not kidding. An undocumented loan and a no-interest loan is a gift according to IRS rules.
Yes, I know, but lending a car to your son?
Gill
I am assuming it's lending to your son in a year where you have already given the son $15,000 or more in that year.

But maybe it's too trivial to worry about. None of it matters if you are not audited or it's not detected in an audit, anyway.

Gill
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Re: Gift to Son and Effect on Gift Tax

Post by Gill » Wed May 30, 2018 8:20 am

tadamsmar wrote:
Wed May 30, 2018 7:38 am
Gill wrote:
Wed May 30, 2018 7:32 am
tadamsmar wrote:
Wed May 30, 2018 7:31 am
Gill wrote:
Tue May 29, 2018 6:07 pm
tadamsmar wrote:
Tue May 29, 2018 3:47 pm


If you loan the car to avoid filling out the gift tax form, then you need to charge the IRS minimum interest rate and write up a short loan agreement. I think you should both sign it, you definitely need to document the loan to be kosher with the IRS rules. You can gift him the interest, you just need to keep the gift below the $15k/year limit multiplied by 1 or 2 or 4 depending on the spousal combinatorics
You are kidding about this, aren’t you?
Gill
Not kidding. An undocumented loan and a no-interest loan is a gift according to IRS rules.
Yes, I know, but lending a car to your son?
Gill
I am assuming it's lending to your son in a year where you have already given the son $15,000 or more in that year.

But maybe it's too trivial to worry about. None of it matters if you are not audited or it's not detected in an audit, anyway.
Do you have any support for that position? This is the first time I’ve ever heard of the loan of tangible personal property being treated as a gift.
Gill

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tadamsmar
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Re: Gift to Son and Effect on Gift Tax

Post by tadamsmar » Wed May 30, 2018 9:20 am

Gill wrote:
Wed May 30, 2018 8:20 am
tadamsmar wrote:
Wed May 30, 2018 7:38 am
Gill wrote:
Wed May 30, 2018 7:32 am
tadamsmar wrote:
Wed May 30, 2018 7:31 am
Gill wrote:
Tue May 29, 2018 6:07 pm

You are kidding about this, aren’t you?
Gill
Not kidding. An undocumented loan and a no-interest loan is a gift according to IRS rules.
Yes, I know, but lending a car to your son?
Gill
I am assuming it's lending to your son in a year where you have already given the son $15,000 or more in that year.

But maybe it's too trivial to worry about. None of it matters if you are not audited or it's not detected in an audit, anyway.
Do you have any support for that position? This is the first time I’ve ever heard of the loan of tangible personal property being treated as a gift.
Gill
"Essentially, if you lend property at a rate below the applicable federal rate (AFR) published by the IRS, the difference between the AFR and the loan rate is considered a gift."

https://www.withum.com/kc/gift-loan-gift-loan/

It's either a gift, a loan, or a gift loan, according to that link. I suppose you could also rent it to him. Anyway, if you don't document it properly in a loan agreement or rental agreement, the IRS will consider the property to be a gift. If the interest in the loan agreement is too low, then the delta interest is a gift. If the rental rate to too low, then the delta rental rate is a gift.

None of this matters till you hit $15,000/yr in total gifts.
Last edited by tadamsmar on Wed May 30, 2018 9:40 am, edited 2 times in total.

infotrader
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Re: Gift to Son and Effect on Gift Tax

Post by infotrader » Wed May 30, 2018 9:33 am

Even if you said no parental advice, I still want to praise that it is a nice thing to do.

Spirit Rider
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Re: Gift to Son and Effect on Gift Tax

Post by Spirit Rider » Wed May 30, 2018 10:33 am

tadamsmar wrote:
Wed May 30, 2018 9:20 am
Gill wrote:
Wed May 30, 2018 8:20 am
tadamsmar wrote:
Wed May 30, 2018 7:38 am
Gill wrote:
Wed May 30, 2018 7:32 am
tadamsmar wrote:
Wed May 30, 2018 7:31 am
Not kidding. An undocumented loan and a no-interest loan is a gift according to IRS rules.
Yes, I know, but lending a car to your son?
I am assuming it's lending to your son in a year where you have already given the son $15,000 or more in that year.

But maybe it's too trivial to worry about. None of it matters if you are not audited or it's not detected in an audit, anyway
Do you have any support for that position? This is the first time I’ve ever heard of the loan of tangible personal property being treated as a gift.
"Essentially, if you lend property at a rate below the applicable federal rate (AFR) published by the IRS, the difference between the AFR and the loan rate is considered a gift."

https://www.withum.com/kc/gift-loan-gift-loan/

It's either a gift, a loan, or a gift loan, according to that link. I suppose you could also rent it to him. Anyway, if you don't document it properly in a loan agreement or rental agreement, the IRS will consider the property to be a gift. If the interest in the loan agreement is too low, then the delta interest is a gift. If the rental rate to too low, then the delta rental rate is a gift.
First, some random link from the net is worth exactly what you paid for it. Second, it does not even support your contention.

"A loan occurs when property is transferred from one party (the lender) to another (the borrower) under the terms of a contract which requires repayment of the principal value of the property loaned plus interest."

Allowing a family member to temporarily use your car does not even remotely constitute a gift, loan or gift loan.

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tadamsmar
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Re: Gift to Son and Effect on Gift Tax

Post by tadamsmar » Wed May 30, 2018 10:50 am

Spirit Rider wrote:
Wed May 30, 2018 10:33 am
tadamsmar wrote:
Wed May 30, 2018 9:20 am
Gill wrote:
Wed May 30, 2018 8:20 am
tadamsmar wrote:
Wed May 30, 2018 7:38 am
Gill wrote:
Wed May 30, 2018 7:32 am

Yes, I know, but lending a car to your son?
I am assuming it's lending to your son in a year where you have already given the son $15,000 or more in that year.

But maybe it's too trivial to worry about. None of it matters if you are not audited or it's not detected in an audit, anyway
Do you have any support for that position? This is the first time I’ve ever heard of the loan of tangible personal property being treated as a gift.
"Essentially, if you lend property at a rate below the applicable federal rate (AFR) published by the IRS, the difference between the AFR and the loan rate is considered a gift."

https://www.withum.com/kc/gift-loan-gift-loan/

It's either a gift, a loan, or a gift loan, according to that link. I suppose you could also rent it to him. Anyway, if you don't document it properly in a loan agreement or rental agreement, the IRS will consider the property to be a gift. If the interest in the loan agreement is too low, then the delta interest is a gift. If the rental rate to too low, then the delta rental rate is a gift.
First, some random link from the net is worth exactly what you paid for it. Second, it does not even support your contention.

"A loan occurs when property is transferred from one party (the lender) to another (the borrower) under the terms of a contract which requires repayment of the principal value of the property loaned plus interest."

Allowing a family member to temporarily use your car does not even remotely constitute a gift, loan or gift loan.
I agree that is does not constitute a loan in the eyes of the IRS if it is not documented as such.

In the context of this thread, the proposal was to loan a $13,000 car in a year where gifting the car would require filling out a 709. The car would be loaned until next year and then be gifted to the son. Not sure if that is temporary use of the car. Anyway, the IRS provides a $15,000/yr gift exclusion to cover the trivial cases, it only becomes an issue when you exceed that.

Gill
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Re: Gift to Son and Effect on Gift Tax

Post by Gill » Wed May 30, 2018 11:49 am

Spirit Rider wrote:
Wed May 30, 2018 10:33 am
tadamsmar wrote:
Wed May 30, 2018 9:20 am
Gill wrote:
Wed May 30, 2018 8:20 am
tadamsmar wrote:
Wed May 30, 2018 7:38 am

Allowing a family member to temporarily use your car does not even remotely constitute a gift, loan or gift loan.

Gill
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Location: Florida

Re: Gift to Son and Effect on Gift Tax

Post by Gill » Wed May 30, 2018 11:50 am

Gill wrote:
Wed May 30, 2018 11:49 am
Spirit Rider wrote:
Wed May 30, 2018 10:33 am
tadamsmar wrote:
Wed May 30, 2018 9:20 am
Gill wrote:
Wed May 30, 2018 8:20 am
tadamsmar wrote:
Wed May 30, 2018 7:38 am

Allowing a family member to temporarily use your car does not even remotely constitute a gift, loan or gift loan.
That's my position as well. It seeks to me there is a de minimis aspect to gift tax laws and it wasn't designed to pick up everything done for another without consideration. I realize the annual exclusion is designed to pick up the small stuff but, if your position is correct, if I've given my daughter a $15,000 check on January 1, I then must report anything I've done for her or given her for the remainder of the year that is not an obligation of support.
Clearly the law is not designed to tax such gratuitous transfers.
Gill

RickBoglehead
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Re: Gift to Son and Effect on Gift Tax

Post by RickBoglehead » Wed May 30, 2018 12:17 pm

First, the OP said he was GIVING the used car to his son, not loaning it.

Having done that for both sons (gave them used cars) both were transferred at the Secretary of State's offices in Michigan for $1, which is the standard valuation for a family title change. Michigan does not tax that transfer.

Not that either maxed out on other gifts in the year, but had I given them the max in cash that year, I would NOT have filled out a gift form for a used car. Both were worth $3,000 or less, but I wouldn't do it even at a somewhat higher value. Both were dependents at the time.

Spirit Rider
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Re: Gift to Son and Effect on Gift Tax

Post by Spirit Rider » Wed May 30, 2018 12:33 pm

RickBoglehead wrote:
Wed May 30, 2018 12:17 pm
First, the OP said he was GIVING the used car to his son, not loaning it.
Yes... But as is often the case when an OP posts asks for help, alternate suggestions such as this are made.
jerryk68 wrote:
Tue May 29, 2018 3:17 pm
You could "lend " him the car until January 1st where upon you gift him the car next year.

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tadamsmar
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Re: Gift to Son and Effect on Gift Tax

Post by tadamsmar » Wed May 30, 2018 12:37 pm

At this point, I think it's too de minimis to even bother citing the IRS on these matters. Not worthy of further discussion, in my view. But I don't mean to disagree with anyone who wishes to discuss the matter more.
Last edited by tadamsmar on Wed May 30, 2018 12:40 pm, edited 1 time in total.

RickBoglehead
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Re: Gift to Son and Effect on Gift Tax

Post by RickBoglehead » Wed May 30, 2018 12:39 pm

This ^^

WolfgangPauli
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Re: Gift to Son and Effect on Gift Tax

Post by WolfgangPauli » Wed Jun 06, 2018 9:36 pm

infotrader wrote:
Wed May 30, 2018 9:33 am
Even if you said no parental advice, I still want to praise that it is a nice thing to do.
Thank you.. Sometimes I get people who tell me I am a horrible parent because I "give" these things away but honestly, I am not sure what the purpose of my life is except to make his even better than mine (and I have been lucky).. so, it is just "what I do".

He worked hard.. Undergrad University of Michigan and Graduate School at Notre Dame..

A couple other things I have learned:

1. He is not a dependent anymore so that does not matter.

2. I did not cosign the loans. If I had then none of this would matter because it would not be a gift. However, since they are "his" loans it is a gift. I did not cosign because I followed the rule of "no one will let you borrow for retirement but they will for school". So, I kind of hedged. But now I am in a position where I am certain retirement is a lock so I can do this.

3. I LOVE the idea of giving to him and his spouse.. Sept 8 he gets married and we will do that.

I likely will just fill out the form and not worry about loaning cars etc..

Thanks everyone!
Twitter: @JAXbogleheads | EM: JAXbogleheads@gmail.com

infotrader
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Re: Gift to Son and Effect on Gift Tax

Post by infotrader » Sat Jun 09, 2018 10:30 am

I could agree more.
If life is a whole package and you can buy happiness with money (making life easier for your loved ones, thus making them, and you happy), there is no better deal than that.

keepingitsimple
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Re: Gift to Son and Effect on Gift Tax

Post by keepingitsimple » Sat Jun 09, 2018 12:52 pm

WolfgangPauli wrote:
Wed Jun 06, 2018 9:36 pm
infotrader wrote:
Wed May 30, 2018 9:33 am
Even if you said no parental advice, I still want to praise that it is a nice thing to do.
Thank you.. Sometimes I get people who tell me I am a horrible parent because I "give" these things away but honestly, I am not sure what the purpose of my life is except to make his even better than mine (and I have been lucky).. so, it is just "what I do".

He worked hard.. Undergrad University of Michigan and Graduate School at Notre Dame..

A couple other things I have learned:

1. He is not a dependent anymore so that does not matter.

2. I did not cosign the loans. If I had then none of this would matter because it would not be a gift. However, since they are "his" loans it is a gift. I did not cosign because I followed the rule of "no one will let you borrow for retirement but they will for school". So, I kind of hedged. But now I am in a position where I am certain retirement is a lock so I can do this.

3. I LOVE the idea of giving to him and his spouse.. Sept 8 he gets married and we will do that.

I likely will just fill out the form and not worry about loaning cars etc..

Thanks everyone!
I agree with gifting to your son and his (to be) wife, it's simple and straightforward and is just a form to fill out. Some states may also require a gift form be filed on the state level too, so you may want to verify with a CPA.

Jablean
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Re: Gift to Son and Effect on Gift Tax

Post by Jablean » Sat Jun 09, 2018 4:12 pm

WolfgangPauli wrote:
Wed Jun 06, 2018 9:36 pm
infotrader wrote:
Wed May 30, 2018 9:33 am
Even if you said no parental advice, I still want to praise that it is a nice thing to do.
Thank you.. Sometimes I get people who tell me I am a horrible parent because I "give" these things away but honestly, I am not sure what the purpose of my life is except to make his even better than mine (and I have been lucky).. so, it is just "what I do".

He worked hard.. Undergrad University of Michigan and Graduate School at Notre Dame..

A couple other things I have learned:

1. He is not a dependent anymore so that does not matter.

2. I did not cosign the loans. If I had then none of this would matter because it would not be a gift. However, since they are "his" loans it is a gift. I did not cosign because I followed the rule of "no one will let you borrow for retirement but they will for school". So, I kind of hedged. But now I am in a position where I am certain retirement is a lock so I can do this.

3. I LOVE the idea of giving to him and his spouse.. Sept 8 he gets married and we will do that.

I likely will just fill out the form and not worry about loaning cars etc..

Thanks everyone!
His having a wife will double your undocumented gifting ability. You can give $15,000 to him and $15,000 to his wife and your spouse can do the same. So $60,000 that doesn't have to be reported.

Maya1234
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Re: Gift to Son and Effect on Gift Tax

Post by Maya1234 » Sun Jun 10, 2018 2:37 pm

No need to fill anything really. Just give his fiancé the car and pay off the loans.

Gill
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Re: Gift to Son and Effect on Gift Tax

Post by Gill » Sun Jun 10, 2018 2:46 pm

Maya1234 wrote:
Sun Jun 10, 2018 2:37 pm
No need to fill anything really. Just give his fiancé the car and pay off the loans.
How do you figure that? Just ignore the requirement of a gift tax return?
Gill

Nutmeg
Posts: 121
Joined: Wed Jul 26, 2017 12:52 pm

Re: Gift to Son and Effect on Gift Tax

Post by Nutmeg » Sun Jun 10, 2018 7:59 pm

If the OP wishes to pay off the student loans, he and his spouse can give the son and the son’s wife $30,000, which together with the $20,000 already given this year equals $50,000. That amount is less than the $60,000 amount that a married couple can give another married couple without having to file a gift tax return.

The OP can let his son drive the $13,000 car for the rest of 2018 with no tax consequences. In 2019, he can transfer the title to the car to his son with no tax consequences.

Gill
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Location: Florida

Re: Gift to Son and Effect on Gift Tax

Post by Gill » Sun Jun 10, 2018 8:10 pm

Nutmeg wrote:
Sun Jun 10, 2018 7:59 pm
If the OP wishes to pay off the student loans, he and his spouse can give the son and the son’s wife $30,000, which together with the $20,000 already given this year equals $50,000. That amount is less than the $60,000 amount that a married couple can give another married couple without having to file a gift tax return.

The OP can let his son drive the $13,000 car for the rest of 2018 with no tax consequences. In 2019, he can transfer the title to the car to his son with no tax consequences.
Yes, I know but I didn’t think giving to the spouse was in the example.
Gill

Nutmeg
Posts: 121
Joined: Wed Jul 26, 2017 12:52 pm

Re: Gift to Son and Effect on Gift Tax

Post by Nutmeg » Sun Jun 10, 2018 9:11 pm

Gill wrote:
Sun Jun 10, 2018 8:10 pm
Nutmeg wrote:
Sun Jun 10, 2018 7:59 pm
If the OP wishes to pay off the student loans, he and his spouse can give the son and the son’s wife $30,000, which together with the $20,000 already given this year equals $50,000. That amount is less than the $60,000 amount that a married couple can give another married couple without having to file a gift tax return.

The OP can let his son drive the $13,000 car for the rest of 2018 with no tax consequences. In 2019, he can transfer the title to the car to his son with no tax consequences.
Yes, I know but I didn’t think giving to the spouse was in the example.
Gill
While giving to the spouse wasn’t in the original post, the fact that the son plans to be married in 2018 allows the OP additional flexibility. I wasn’t responding to you but to the conversation as a whole.

Maya1234 is incorrect in stating that no tax forms are needed if the OP pays off the $30,000 loan and gives the car to the fiancé; perhaps Maya1234 missed the fact that the OP already gave $20,000 to the son in 2018.

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