Giving monetary gifts--bank logistics

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chessknt
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Giving monetary gifts--bank logistics

Post by chessknt » Fri May 24, 2019 6:36 pm

If I want to give my daughter and her husband 60k (they pool finances) and want to do so without triggering irs gift tax, is it appropriate for me to transfer the entire amount (60k) from my joint bank account with my wife to my daughter's joint bank account with her husband? Or do my wife and I need to transfer from individual accounts to their respective individual accounts (which they don't even have yet)? Or does it not matter as long as my math works out and I can explain it in the event of an audit?

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arcticpineapplecorp.
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Re: Giving monetary gifts--bank logistics

Post by arcticpineapplecorp. » Fri May 24, 2019 6:54 pm

assuming you're in the U.S. there is an exemption from the gift tax. Read below (especially the second part):
Exemptions

There are two levels of exemption from the gift tax. First, gifts of up to the annual exclusion ($14,000 per recipient in 2013, 2014, 2015, 2016 and 2017[7]) incur no tax or filing requirement. By splitting their gifts, married couples can give up to twice this amount tax-free. Note that each giver and recipient pair has their own unique annual exclusion; a giver can give to any number of recipients and the exclusion is not affected by other gifts that recipient may have received from others.

Second, gifts in excess of the annual exclusion may still be tax-free up to the lifetime estate basic exclusion amount ($5,340,000 in 2014, $5,430,000 in 2015, $5,450,000 in 2016), although for estates over that amount such gifts might increase estate taxes. Taxpayers that expect to have a taxable estate may sometimes prefer to pay gift taxes as they occur, rather than saving them up as part of the estate.

Furthermore, transfers (whether by bequest, gift, or inheritance) in excess of $1 million may be subject to a generation-skipping transfer tax if certain other criteria are met.
Further information: Estate tax in the United States

source: https://en.wikipedia.org/wiki/Gift_tax_ ... ted_States
Since then it looks like the lifetime exemption is $11.18 million to one in a lifetime (you and a spouse can give away $22.36 mil in your lifetime before creating problems). source: posting.php?mode=reply&f=2&t=281844
So as long as you don't give more than $11.18 million (single, $22.36 million over your lifetimes), you're good.

You might have to complete a gift tax form (form 709) if it's more than the annual exclusion to make sure you don't go over the lifetime limit.
"May you live as long as you want and never want as long as you live" -- Irish Blessing | "Invest we must" -- Jack Bogle

Silk McCue
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Re: Giving monetary gifts--bank logistics

Post by Silk McCue » Fri May 24, 2019 7:00 pm

60k joint to joint is just fine and is within the $15k per person for each of you. If you exceed that in a year no tax is due. You just need to File form 709 to report the gift against your lifetime limit. You could give each one multiples of that this year as long as you file form 709.

https://smartasset.com/retirement/gift-tax-limits

This is the Wiki from Bogleheads.

https://www.bogleheads.org/wiki/Gift_tax

Cheers

Bobby206
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Re: Giving monetary gifts--bank logistics

Post by Bobby206 » Fri May 24, 2019 7:31 pm

chessknt wrote:
Fri May 24, 2019 6:36 pm
If I want to give my daughter and her husband 60k (they pool finances) and want to do so without triggering irs gift tax, is it appropriate for me to transfer the entire amount (60k) from my joint bank account with my wife to my daughter's joint bank account with her husband? Or do my wife and I need to transfer from individual accounts to their respective individual accounts (which they don't even have yet)? Or does it not matter as long as my math works out and I can explain it in the event of an audit?
It sounds like you are trying to commit tax fraud and you don't need to. Write a check and be done. If you and wife and give to daughter and husband I believe you can do $60k in a calendar year totally tax free using annual exclusions. Do not need to file a 709 for that. Just do two checks for $30k each or $29,950 and you are good I believe.

Silk McCue
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Re: Giving monetary gifts--bank logistics

Post by Silk McCue » Fri May 24, 2019 7:42 pm

Bobby206 wrote:
Fri May 24, 2019 7:31 pm

It sounds like you are trying to commit tax fraud and you don't need to.
What? There is absolutely nothing in the original post that smells of tax fraud. Just an honest question about what the right way to do this is. 60k joint account to joint account is 100% above board.

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Topic Author
chessknt
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Re: Giving monetary gifts--bank logistics

Post by chessknt » Fri May 24, 2019 8:46 pm

Thank you for the responses, just wanted to make sure joint to joint didn't violate the gift tax exclusion rules if the amount was more than 15k.

decapod10
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Re: Giving monetary gifts--bank logistics

Post by decapod10 » Fri May 24, 2019 9:41 pm

Bobby206 wrote:
Fri May 24, 2019 7:31 pm

It sounds like you are trying to commit tax fraud and you don't need to.
I don’t think anything OP has talked about constitutes tax fraud. If they all opened individual accounts to process the gifts, there’s nothing wrong with that, it’s just a pain To do so. They are technically 4 separate gifts among 4 different individuals.

It’s closer to structuring I suppose, but it’s still not really structuring IMO.

rjbraun
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Re: Giving monetary gifts--bank logistics

Post by rjbraun » Fri May 24, 2019 9:58 pm

Iirc, banks checks of over $10,000 in amount must be reported. I thought banks themselves were required to report the information to ... maybe the Fed or some other federal agency. I don't know or recall offhand exactly whom, but the purpose is to detect potential money laundering.

I've heard that for this reason someone might prefer to write two checks of under $10,000, spread out perhaps over some period of time, rather than one check of, say, $15,000.

I couldn't find an exact reference in my quick google search, but this IRS item seems to touch on what I'm referring to (sorry, too tired now to decipher the details).

https://www.irs.gov/newsroom/cash-payme ... laundering

decapod10
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Re: Giving monetary gifts--bank logistics

Post by decapod10 » Fri May 24, 2019 10:06 pm

rjbraun wrote:
Fri May 24, 2019 9:58 pm
Iirc, banks checks of over $10,000 in amount must be reported. I thought banks themselves were required to report the information to ... maybe the Fed or some other federal agency. I don't know or recall offhand exactly whom, but the purpose is to detect potential money laundering.

I've heard that for this reason someone might prefer to write two checks of under $10,000, spread out perhaps over some period of time, rather than one check of, say, $15,000.

I couldn't find an exact reference in my quick google search, but this IRS item seems to touch on what I'm referring to (sorry, too tired now to decipher the details).

https://www.irs.gov/newsroom/cash-payme ... laundering
Yes, it’s called “structuring” (edit: when people purposely break up their payments to make them smaller in order to avoid detection) . However, in my opinion (I’m not a lawyer) this is technically supposed to be 4 separate gifts of $15k. In my non-legal opinion, giving 4x $15k payments is the “right” way to do it , while giving $60k at once is the shortcut, so it’s not structuring (and it’s still above $10k anyway). Just my opinion though.
Last edited by decapod10 on Fri May 24, 2019 10:34 pm, edited 2 times in total.

mcraepat9
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Re: Giving monetary gifts--bank logistics

Post by mcraepat9 » Fri May 24, 2019 10:16 pm

This transaction as proposed is not structuring and is not illegal. OP, carry on as you planned.
Amateur investors are not cool-headed logicians.

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