31k to daughter for car. Any tax problem?

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HappyJack
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31k to daughter for car. Any tax problem?

Post by HappyJack » Sat Jan 11, 2020 6:07 pm

I recently gave my daughter 31K to help with the purchase of a car. Did I create any type of tax problem?

Jags4186
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Re: 31k to daughter for car. Any tax problem?

Post by Jags4186 » Sat Jan 11, 2020 6:08 pm

HappyJack wrote:
Sat Jan 11, 2020 6:07 pm
I recently gave my daughter 31K to help with the purchase of a car. Did I create any type of tax problem?
It will go against your lifetime exclusion. Next time give her $15k and have your spouse if available give her $15k. If it is a joint account I believe you can give $30k without filing a gift tax return. But since you went $31,000 you're stuck filing.

cadreamer2015
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Re: 31k to daughter for car. Any tax problem?

Post by cadreamer2015 » Sat Jan 11, 2020 6:13 pm

I believe you need to file a gift tax form IRS 709. This may not be needed if your daughter is your dependent for income tax purposes (but I am not sure). No tax owed, but need to file the form so that this gift goes against your lifetime exclusion.
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Topic Author
HappyJack
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Re: 31k to daughter for car. Any tax problem?

Post by HappyJack » Sat Jan 11, 2020 6:15 pm

I don’t suppose there’s anyway to undo it once she’s cashed the check. It is a joint account so maybe it can be from both :oops: Sounds like one for my accountant.

Jags4186
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Re: 31k to daughter for car. Any tax problem?

Post by Jags4186 » Sat Jan 11, 2020 6:15 pm

HappyJack wrote:
Sat Jan 11, 2020 6:15 pm
I don’t suppose there’s anyway to undo it once she’s cashed the check. It is a joint account so maybe it can be from both :oops: Sounds like one for my accountant.
I mean, have her give it back to you, or just go with it. The chances of an audit are incredibly tiny especially if you are a regular W2 employee or are retired with a relatively simple tax return.

stan1
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Re: 31k to daughter for car. Any tax problem?

Post by stan1 » Sat Jan 11, 2020 7:08 pm

I know what I would do, and it wouldn't involve asking questions on the internet or talking to my accountant.

prd1982
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Re: 31k to daughter for car. Any tax problem?

Post by prd1982 » Sat Jan 11, 2020 7:17 pm

I believe the IRS assumes it is from the 2 of you. But I think you are still over the limit. So file the IRS 709. Unless you have an 11M+ estate, there isn't an adverse result.

Grt2bOutdoors
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Re: 31k to daughter for car. Any tax problem?

Post by Grt2bOutdoors » Sat Jan 11, 2020 7:22 pm

The $30k is from both of you. No filing required. No issue. Filing for a $1k gift?? :|
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

student
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Re: 31k to daughter for car. Any tax problem?

Post by student » Sat Jan 11, 2020 7:23 pm

Does it not solve the problem if OP's daughter returns the extra $1,000?

Grt2bOutdoors
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Re: 31k to daughter for car. Any tax problem?

Post by Grt2bOutdoors » Sat Jan 11, 2020 7:24 pm

student wrote:
Sat Jan 11, 2020 7:23 pm
Does it not solve the problem if OP's daughter returns the extra $1,000?
Yes, but why return it? Chance of an audit exception that low? Slim.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

student
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Re: 31k to daughter for car. Any tax problem?

Post by student » Sat Jan 11, 2020 7:48 pm

Grt2bOutdoors wrote:
Sat Jan 11, 2020 7:24 pm
student wrote:
Sat Jan 11, 2020 7:23 pm
Does it not solve the problem if OP's daughter returns the extra $1,000?
Yes, but why return it? Chance of an audit exception that low? Slim.
Yes. Doing so will make it clear that it is within the law. OP also says recently. If recently means 2019, then OP can gift the $1,000 again.

TropikThunder
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Re: 31k to daughter for car. Any tax problem?

Post by TropikThunder » Sat Jan 11, 2020 8:31 pm

Grt2bOutdoors wrote:
Sat Jan 11, 2020 7:24 pm
student wrote:
Sat Jan 11, 2020 7:23 pm
Does it not solve the problem if OP's daughter returns the extra $1,000?
Yes, but why return it? Chance of an audit exception that low? Slim.
Why is it so hard to tell someone to do the right (legal) thing? It’s a simple form, and it’s not a $1,000 overage without submitting the form - it’s a $16,000 overage. The Form 709 is how you tell the IRS that the gift is half from each spouse, otherwise it’s considered to be 100% from the one that wrote the check.

“Oh you probably won’t get caught” is not the Boglehead way.

student
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Re: 31k to daughter for car. Any tax problem?

Post by student » Sat Jan 11, 2020 8:49 pm

TropikThunder wrote:
Sat Jan 11, 2020 8:31 pm
Grt2bOutdoors wrote:
Sat Jan 11, 2020 7:24 pm
student wrote:
Sat Jan 11, 2020 7:23 pm
Does it not solve the problem if OP's daughter returns the extra $1,000?
Yes, but why return it? Chance of an audit exception that low? Slim.
Why is it so hard to tell someone to do the right (legal) thing? It’s a simple form, and it’s not a $1,000 overage without submitting the form - it’s a $16,000 overage. The Form 709 is how you tell the IRS that the gift is half from each spouse, otherwise it’s considered to be 100% from the one that wrote the check.

“Oh you probably won’t get caught” is not the Boglehead way.
OP says it is from a joint account. So I think the overage is $1,000 even though I agree that two $15,000 checks is safer.

stan1
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Re: 31k to daughter for car. Any tax problem?

Post by stan1 » Sat Jan 11, 2020 9:14 pm

Is daughter married? Then annual gift tax exclusion would be $60K.

tomorrowman
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Re: 31k to daughter for car. Any tax problem?

Post by tomorrowman » Sat Jan 11, 2020 9:18 pm

Just curious?

What would be the implications if the "Father" went to the dealership and wrote the check for the vehicle directly or say paid for 99% of the car and the "Daughter" only paid the remaining 1%? Would she be entitled to the car title without issue? Likewise, I don't think there's any penalty for anyone paying someone else's mortgage, except they can't deduct the interest.

student
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Re: 31k to daughter for car. Any tax problem?

Post by student » Sat Jan 11, 2020 9:24 pm

tomorrowman wrote:
Sat Jan 11, 2020 9:18 pm
Just curious?

What would be the implications if the "Father" went to the dealership and wrote the check for the vehicle directly or say paid for 99% of the car and the "Daughter" only paid the remaining 1%? Would she be entitled to the car title without issue? Likewise, I don't think there's any penalty for anyone paying someone else's mortgage, except they can't deduct the interest.
I think it will be considered a gift. https://ttlc.intuit.com/community/taxes ... /00/362842 https://www.wikihow.com/Pay-off-Someone ... s-Mortgage https://finance.zacks.com/pay-nieces-mo ... -8281.html

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Re: 31k to daughter for car. Any tax problem?

Post by Grt2bOutdoors » Sat Jan 11, 2020 9:39 pm

TropikThunder wrote:
Sat Jan 11, 2020 8:31 pm
Grt2bOutdoors wrote:
Sat Jan 11, 2020 7:24 pm
student wrote:
Sat Jan 11, 2020 7:23 pm
Does it not solve the problem if OP's daughter returns the extra $1,000?
Yes, but why return it? Chance of an audit exception that low? Slim.
Why is it so hard to tell someone to do the right (legal) thing? It’s a simple form, and it’s not a $1,000 overage without submitting the form - it’s a $16,000 overage. The Form 709 is how you tell the IRS that the gift is half from each spouse, otherwise it’s considered to be 100% from the one that wrote the check.

“Oh you probably won’t get caught” is not the Boglehead way.
If you hold a joint checking account with your spouse, each parent does not have to issue a separate check to have it counted as a gift.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

LFS1234
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Re: 31k to daughter for car. Any tax problem?

Post by LFS1234 » Sun Jan 12, 2020 12:02 am

HappyJack wrote:
Sat Jan 11, 2020 6:15 pm
I don’t suppose there’s anyway to undo it once she’s cashed the check. It is a joint account so maybe it can be from both :oops: Sounds like one for my accountant.
Why not have each parent gift 15K to the daughter and make the balance ($1K) a loan, which could be forgiven the following year. Why file a Form 709 that reduces your future gifting ability and that you have to keep track of for the rest of your life, when you can easily and legitimately arrange your affairs so as to accomplish your desired goals without filing that form?

Those are the questions I'd ask my accountant.

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Re: 31k to daughter for car. Any tax problem?

Post by AlohaJoe » Sun Jan 12, 2020 2:06 am

LFS1234 wrote:
Sun Jan 12, 2020 12:02 am
Why not have each parent gift 15K to the daughter and make the balance ($1K) a loan, which could be forgiven the following year.
With the caveat that you are almost certain to never be audited and have this come to light.... The IRS is virtually guaranteed to deem the loan is a sham and was actually a gift. With a loan you have to be about to demonstrate a real intention to repay it. Given the numbers involved (you just happened to give a loan for the amount over the gift exclusion limit??) and the fact that your accountant would give testimony incriminating you.....

If you're going to break the tax law.... Just give her $31,000 and don't report it. The IRS has almost no way to actually follow up and see if people have gifted beyond the exclusion limit. It relies almost entirely on self-reporting.

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Re: 31k to daughter for car. Any tax problem?

Post by Spirit Rider » Sun Jan 12, 2020 9:46 am

AlohaJoe wrote:
Sun Jan 12, 2020 2:06 am
LFS1234 wrote:
Sun Jan 12, 2020 12:02 am
Why not have each parent gift 15K to the daughter and make the balance ($1K) a loan, which could be forgiven the following year.
With the caveat that you are almost certain to never be audited and have this come to light.... The IRS is virtually guaranteed to deem the loan is a sham and was actually a gift. With a loan you have to be about to demonstrate a real intention to repay it. Given the numbers involved (you just happened to give a loan for the amount over the gift exclusion limit??) and the fact that your accountant would give testimony incriminating you.....

If you're going to break the tax law.... Just give her $31,000 and don't report it. The IRS has almost no way to actually follow up and see if people have gifted beyond the exclusion limit. It relies almost entirely on self-reporting.
This is not correct. Perfectly legitimate family loans can and are made all the time where the loan is repaid with gifts from the loan creditor.

You need to properly document the loan with a promissory note. If it is structured as a demand loan for <= $100K, no interest is required. Otherwise, the debtor should be charged >= the Applicable Federal Rate (AFR) and the creditor must claim this on their tax return. Or the creditor must claim an imputed AFR.

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Re: 31k to daughter for car. Any tax problem?

Post by junior » Sun Jan 12, 2020 10:46 am

Jags4186 wrote:
Sat Jan 11, 2020 6:08 pm
HappyJack wrote:
Sat Jan 11, 2020 6:07 pm
I recently gave my daughter 31K to help with the purchase of a car. Did I create any type of tax problem?
It will go against your lifetime exclusion. Next time give her $15k and have your spouse if available give her $15k. If it is a joint account I believe you can give $30k without filing a gift tax return. But since you went $31,000 you're stuck filing.
Are you giving this advice because it's annoying to fill out the paperwork or because you are assuming OP is going to give daughter over 11.58 million dollars?

Jags4186
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Re: 31k to daughter for car. Any tax problem?

Post by Jags4186 » Sun Jan 12, 2020 11:19 am

junior wrote:
Sun Jan 12, 2020 10:46 am
Jags4186 wrote:
Sat Jan 11, 2020 6:08 pm
HappyJack wrote:
Sat Jan 11, 2020 6:07 pm
I recently gave my daughter 31K to help with the purchase of a car. Did I create any type of tax problem?
It will go against your lifetime exclusion. Next time give her $15k and have your spouse if available give her $15k. If it is a joint account I believe you can give $30k without filing a gift tax return. But since you went $31,000 you're stuck filing.
Are you giving this advice because it's annoying to fill out the paperwork or because you are assuming OP is going to give daughter over 11.58 million dollars?
Annoying to fill out paperwork.

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Re: 31k to daughter for car. Any tax problem?

Post by willthrill81 » Sun Jan 12, 2020 12:16 pm

LFS1234 wrote:
Sun Jan 12, 2020 12:02 am
HappyJack wrote:
Sat Jan 11, 2020 6:15 pm
I don’t suppose there’s anyway to undo it once she’s cashed the check. It is a joint account so maybe it can be from both :oops: Sounds like one for my accountant.
Why not have each parent gift 15K to the daughter and make the balance ($1K) a loan, which could be forgiven the following year.
Those are the questions I'd ask my accountant.
Because the $1k 'loan', once forgiven, would become taxable income to the daughter.

They should file IRS form 709. But if they don't, the odds are very high that nothing will come of it.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

TropikThunder
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Re: 31k to daughter for car. Any tax problem?

Post by TropikThunder » Sun Jan 12, 2020 1:16 pm

student wrote:
Sat Jan 11, 2020 8:49 pm
OP says it is from a joint account. So I think the overage is $1,000 even though I agree that two $15,000 checks is safer.
Grt2bOutdoors wrote:
Sat Jan 11, 2020 9:39 pm
If you hold a joint checking account with your spouse, each parent does not have to issue a separate check to have it counted as a gift.
I never said they need to make separate checks, I said they need to file the form to show they are splitting the gifts, otherwise the assumption is that the gift is only from one of the spouses. The instructions for Form 709 are pretty clear:
If you and your spouse both consent, all gifts (including gifts of property held with your spouse as joint tenants or tenants by the entirety) either of you make to third parties during the calendar year will be considered as made one-half by each of you ....

If you meet these requirements and want your gifts to be considered made one-half by you and one-half by your spouse, check the “Yes” box on line 12, complete lines 13 through 17, and have your spouse sign the consent on line 18.
https://www.irs.gov/pub/irs-pdf/i709.pdf

Are you going to get caught, probably not. Is the form a pain? Yeah it’s kind of a pain to fill out (don’t know if TurboTax will do it). But it’s pretty clear that the base assumption of the IRS is that the gift is not split unless you claim it is split. Both spouses don’t need to file their own 709 but the one who didn’t sign the check needs to sign the 709 submitted by the one who did sign the check.

student
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Re: 31k to daughter for car. Any tax problem?

Post by student » Sun Jan 12, 2020 1:44 pm

TropikThunder wrote:
Sun Jan 12, 2020 1:16 pm
student wrote:
Sat Jan 11, 2020 8:49 pm
OP says it is from a joint account. So I think the overage is $1,000 even though I agree that two $15,000 checks is safer.
Grt2bOutdoors wrote:
Sat Jan 11, 2020 9:39 pm
If you hold a joint checking account with your spouse, each parent does not have to issue a separate check to have it counted as a gift.
I never said they need to make separate checks, I said they need to file the form to show they are splitting the gifts, otherwise the assumption is that the gift is only from one of the spouses. The instructions for Form 709 are pretty clear:
You are correct that you did not say they have to make separate checks. I was responding to you regarding the overage. I should have said I "think" rather than "agree" regarding "separate checks."

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Re: 31k to daughter for car. Any tax problem?

Post by manatee2005 » Sun Jan 12, 2020 4:01 pm

HappyJack wrote:
Sat Jan 11, 2020 6:07 pm
I recently gave my daughter 31K to help with the purchase of a car. Did I create any type of tax problem?
How old is the daughter? Does she have a job?

LFS1234
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Re: 31k to daughter for car. Any tax problem?

Post by LFS1234 » Sun Jan 12, 2020 4:42 pm

willthrill81 wrote:
Sun Jan 12, 2020 12:16 pm
LFS1234 wrote:
Sun Jan 12, 2020 12:02 am
HappyJack wrote:
Sat Jan 11, 2020 6:15 pm
I don’t suppose there’s anyway to undo it once she’s cashed the check. It is a joint account so maybe it can be from both :oops: Sounds like one for my accountant.
Why not have each parent gift 15K to the daughter and make the balance ($1K) a loan, which could be forgiven the following year.
Those are the questions I'd ask my accountant.
Because the $1k 'loan', once forgiven, would become taxable income to the daughter.
This is not correct. If the daughter were to default on a loan, then the situation would be different. In the case of a defaulted loan, after reasonable attempts to collect, lenders are generally justified in writing off the loan and the written-off amount would constitute income to the borrower. (Not sure whether or not the IRS would allow this in inter-family arrangements, but this is the case at least with third-party lenders).

In this case, the lender (parent) would be making a gift of the outstanding loan balance to the daughter. There is no default by the daughter, and the lender (parent) isn't seeking to write off the amount at question as a bad debt.

See Spirit Rider's post upthread for additional information.

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willthrill81
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Re: 31k to daughter for car. Any tax problem?

Post by willthrill81 » Sun Jan 12, 2020 4:57 pm

LFS1234 wrote:
Sun Jan 12, 2020 4:42 pm
willthrill81 wrote:
Sun Jan 12, 2020 12:16 pm
LFS1234 wrote:
Sun Jan 12, 2020 12:02 am
HappyJack wrote:
Sat Jan 11, 2020 6:15 pm
I don’t suppose there’s anyway to undo it once she’s cashed the check. It is a joint account so maybe it can be from both :oops: Sounds like one for my accountant.
Why not have each parent gift 15K to the daughter and make the balance ($1K) a loan, which could be forgiven the following year.
Those are the questions I'd ask my accountant.
Because the $1k 'loan', once forgiven, would become taxable income to the daughter.
This is not correct. If the daughter were to default on a loan, then the situation would be different. In the case of a defaulted loan, after reasonable attempts to collect, lenders are generally justified in writing off the loan and the written-off amount would constitute income to the borrower. (Not sure whether or not the IRS would allow this in inter-family arrangements, but this is the case at least with third-party lenders).

In this case, the lender (parent) would be making a gift of the outstanding loan balance to the daughter. There is no default by the daughter, and the lender (parent) isn't seeking to write off the amount at question as a bad debt.

See Spirit Rider's post upthread for additional information.
Spirit Rider's post said nothing about the debt being forgiven.

While forgiven debts are usually considered taxable income, the IRS says that one of the exceptions is in the debt is cancelled as a gift, then it is not considered to be taxable income. So it seems that the OP can send the daughter a written notice next year that the $1k loan has been forgiven as a gift.

I would just file for 709 for the $1k additional amount and call it a day. It's not that hard.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

Goal33
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Re: 31k to daughter for car. Any tax problem?

Post by Goal33 » Sun Jan 12, 2020 5:11 pm

It's funny reading this thread. What about all the millions of people who would have no idea about these rules? I've gone back and forth with my parents in 50k increments with no paperwork. They don't have 12 million so maybe moot point but still...
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Re: 31k to daughter for car. Any tax problem?

Post by willthrill81 » Sun Jan 12, 2020 5:14 pm

Goal33 wrote:
Sun Jan 12, 2020 5:11 pm
It's funny reading this thread. What about all the millions of people who would have no idea about these rules?
Most of them aren't giving sizable gifts. Many who do have been wrongly informed that they need to pay a gift tax if they give more than $15k to one person in one year.

Ignorance is not a legal excuse.
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Re: 31k to daughter for car. Any tax problem?

Post by RudyS » Sun Jan 12, 2020 5:28 pm

manatee2005 wrote:
Sun Jan 12, 2020 4:01 pm
HappyJack wrote:
Sat Jan 11, 2020 6:07 pm
I recently gave my daughter 31K to help with the purchase of a car. Did I create any type of tax problem?
How old is the daughter? Does she have a job?
This was also asked upthread. It is important to know whether this can be considered support rather than a gift.

delamer
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Re: 31k to daughter for car. Any tax problem?

Post by delamer » Sun Jan 12, 2020 5:48 pm

Do you have any investments with significant capital gains and is your daughter in a lower tax bracket than you? If so, it might have made sense to transfer that asset to her sell rather than giving her cash. She’d get your cost basis and pay less (possibly 0%) taxes.

I don’t know if you can undo the cash transfer in the current situation, but something to consider for the future if applicable.

michaelingp
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Re: 31k to daughter for car. Any tax problem?

Post by michaelingp » Sun Jan 12, 2020 6:01 pm

TropikThunder wrote:
Sun Jan 12, 2020 1:16 pm
Yeah it’s kind of a pain to fill out (don’t know if TurboTax will do it).
I don't think TurboTax has the form. I made a similar mistake a few years ago, and couldn't find it in Turbo Tax. Worse, I then went on to make an arithmetic mistake in filling the form manually and since the IRS didn't flag it, I had to file an amended return, all for what is certain to turn out to be a useless exercise given the size of my potential estate. The fact that the IRS didn't flag a simple arithmetic mistake makes me think they don't even read the forms.

I think in this case, one could argue that it was a simple mistake and the cost to the government is de minimis.

inbox788
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Re: 31k to daughter for car. Any tax problem?

Post by inbox788 » Sun Jan 12, 2020 6:06 pm

RudyS wrote:
Sun Jan 12, 2020 5:28 pm
manatee2005 wrote:
Sun Jan 12, 2020 4:01 pm
HappyJack wrote:
Sat Jan 11, 2020 6:07 pm
I recently gave my daughter 31K to help with the purchase of a car. Did I create any type of tax problem?
How old is the daughter? Does she have a job?
This was also asked upthread. It is important to know whether this can be considered support rather than a gift.
What's the difference? Below age 18 vs above? Claim as dependent? Can independent young adult still receive partial support (i.e. $1000)? How does child receive health insurance? And if still on parent's policy, does it have any bearing on other support vs. gift? Same question if child is living at home and getting rent subsidized or forgiven.

https://www.thebalance.com/claiming-adu ... es-4129176

Assuming child is independent, making own money and supporting herself, it's annoying, but straightforward and simplest to just fill out the form.

As far as any penalty, it's not clear to me there is any, unless you exceed the lifetime giving, which is likely a long way out or never. There is no tax due, so I'm not sure what the penalty would be if it's 100% of zero. But it would be harder to fill out a 709 form 3 or 5 or 10 years later, than to just get it over with now.

OP, how old is daughter? married (so spouse can receive annual exclusion)? You're married, right (so spouse can also gift annual exclusion)? Who has title on the car? If you're still on the title, it's not a gift. At least the whole amount. How much is the car cost? Paid in cash? Or if lease or loan, who's signing the papers? Probably more trouble, but there are other/overriding reasons for mixing title.

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Re: 31k to daughter for car. Any tax problem?

Post by LadyGeek » Sun Jan 12, 2020 9:23 pm

There are several comments which imply that the IRS may not catch an incorrectly filed return. For the record, discussions of dishonest behavior or bypassing the law are totally unacceptable.

The intent is to understand how to do this within the existing legal framework; in which case this discussion can continue.

The approach is to educate members on how to do things legally. State your points in a factual manner. If the intent strays from this objective, please report the post and we'll investigate.
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Re: 31k to daughter for car. Any tax problem?

Post by MathWizard » Sun Jan 12, 2020 9:33 pm

HappyJack wrote:
Sat Jan 11, 2020 6:07 pm
I recently gave my daughter 31K to help with the purchase of a car. Did I create any type of tax problem?
Had you asked the question before you gave the money, you could have gotten more help.

Then I would have said:

Your wife and you can write separate checks on Dec 31 2019, and then write a 1K check on Jan 1 2020.

As it, it looks like to me like you gave 26K over the limit for a single tax year, so file the form. You should also keep track for later somewhere since this will go against your lifetime exclusion

Unless you have a huge estate ( over 11 million) this will not cause a problem, you just need to document this.

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Re: 31k to daughter for car. Any tax problem?

Post by randybobandy » Sun Jan 12, 2020 9:35 pm

MathWizard wrote:
Sun Jan 12, 2020 9:33 pm
HappyJack wrote:
Sat Jan 11, 2020 6:07 pm
I recently gave my daughter 31K to help with the purchase of a car. Did I create any type of tax problem?
Had you asked the question before you gave the money, you could have gotten more help.

Then I would have said:

Your wife and you can write separate checks on Dec 31 2019, and then write a 1K check on Jan 1 2020.

As it, it looks like to me like you gave 26K over the limit for a single tax year, so file the form. You should also keep track for later somewhere since this will go against your lifetime exclusion

Unless you have a huge estate ( over 11 million) this will not cause a problem, you just need to document this.
26k over the limit for a single tax year?

-randy bo bandy

Topic Author
HappyJack
Posts: 118
Joined: Thu Jan 10, 2019 7:45 am

Re: 31k to daughter for car. Any tax problem?

Post by HappyJack » Sun Jan 12, 2020 10:22 pm

OP here. Daughter is married and has a job. Don’t know if that has any bearing. Please let me know. Without everyone’s input I would gave no idea about any of this. BTW estate is about as far south of 11M as Antarctica is from New York City.

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willthrill81
Posts: 16275
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Location: USA

Re: 31k to daughter for car. Any tax problem?

Post by willthrill81 » Sun Jan 12, 2020 10:30 pm

HappyJack wrote:
Sun Jan 12, 2020 10:22 pm
OP here. Daughter is married and has a job. Don’t know if that has any bearing. Please let me know. Without everyone’s input I would gave no idea about any of this. BTW estate is about as far south of 11M as Antarctica is from New York City.
You could argue that the gift was to both her and her husband. You and your wife could give them, as a couple, $60k annually and not have to file form 709.
“It's a dangerous business, Frodo, going out your door. You step onto the road, and if you don't keep your feet, there's no knowing where you might be swept off to.” J.R.R. Tolkien,The Lord of the Rings

TallBoy29er
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Joined: Thu Jul 18, 2013 9:06 pm

Re: 31k to daughter for car. Any tax problem?

Post by TallBoy29er » Sun Jan 12, 2020 10:32 pm

Easy peasy. $15k, for you and your spouse ($15k * 2=$30k total), to each of your daughter and her spouse ($30k * 2 = $60k). That is $60k per year. Now, the way the checks are written may influence the technicalities. But otherwise, you will be well below the annual gift giving limit.

H-Town
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Joined: Sun Feb 26, 2017 2:08 pm

Re: 31k to daughter for car. Any tax problem?

Post by H-Town » Sun Jan 12, 2020 10:43 pm

HappyJack wrote:
Sat Jan 11, 2020 6:07 pm
I recently gave my daughter 31K to help with the purchase of a car. Did I create any type of tax problem?
1) Was it 2019 or 2020? If 2019, gift tax return is due April 2020. If 2020, the return is due April 2021.
2) Was the intention to gift your daughter and her spouse? If yes, you're under reporting threshold. $15k x 4 = $60k.
3) If in doubt, file the gift tax to establish your true intention. Fill out gift tax Form 709 is easy. Google Form 709, fill it out, print it, and put it in the mail. No need to involved your accountant to incur unnecessary fees.
4) Do NOT listen to anyone who said not to worry because the odds of the audit.

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