Would one $32K gift to daughter count for both me and spouse?

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LaPasionaria
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Would one $32K gift to daughter count for both me and spouse?

Post by LaPasionaria »

Would like to gift $32K ($16K + $16K) to daughter from my individual (not joint) Vanguard account since I have more liquidity than spouse. Is this okay to do, i.e., would the one gift count as $16K from me and $16K from him since we are not exceeding max?
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happysteward
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Re: Would one $32K gift to daughter count for both me and spouse?

Post by happysteward »

Do you file a joint tax return with him (your spouse)?
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Lee_WSP
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Re: Would one $32K gift to daughter count for both me and spouse?

Post by Lee_WSP »

Are you in a community property state? If not, no.
increment
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Re: Would one $32K gift to daughter count for both me and spouse?

Post by increment »

You want to take advantage of "gift splitting." By filing the right paperwork, you can take advantage of your spouse's exemption (with his consent).
exodusNH
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Re: Would one $32K gift to daughter count for both me and spouse?

Post by exodusNH »

LaPasionaria wrote: Tue Nov 22, 2022 6:17 pm Would like to gift $32K ($16K + $16K) to daughter from my individual (not joint) Vanguard account since I have more liquidity than spouse. Is this okay to do, i.e., would the one gift count as $16K from me and $16K from him since we are not exceeding max?
Do you expect to have an estate of between $6M and $12M (when you die? (Those numbers are adjusted up every year.)

If not, there's no issue with gifting more than $16k or $32k. You just need to file a form with your tax return.
MarkNYC
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Re: Would one $32K gift to daughter count for both me and spouse?

Post by MarkNYC »

LaPasionaria wrote: Tue Nov 22, 2022 6:17 pm Would like to gift $32K ($16K + $16K) to daughter from my individual (not joint) Vanguard account since I have more liquidity than spouse. Is this okay to do, i.e., would the one gift count as $16K from me and $16K from him since we are not exceeding max?
Assuming not in a community property state, then no, a gift from property owned by you individually will not automatically be treated as given 50% from each spouse. In order for the gift to be treated as 50% from each spouse, you would need to file gift tax return Form 709 and elect to "split gifts" with your spouse signing the consent line for gift-splitting. If your spouse did not make any gifts during the year exceeding $16K to any individual, then your spouse would not be required to file his/her own separate gift tax return.

It might be more practical for you to give $16K to your spouse then each of you give $16K to your daughter, thereby avoiding the 709 filing requirement. (note - this would not be a step-transaction)
marcopolo
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Re: Would one $32K gift to daughter count for both me and spouse?

Post by marcopolo »

MarkNYC wrote: Tue Nov 22, 2022 7:10 pm
LaPasionaria wrote: Tue Nov 22, 2022 6:17 pm Would like to gift $32K ($16K + $16K) to daughter from my individual (not joint) Vanguard account since I have more liquidity than spouse. Is this okay to do, i.e., would the one gift count as $16K from me and $16K from him since we are not exceeding max?
Assuming not in a community property state, then no, a gift from property owned by you individually will not automatically be treated as given 50% from each spouse. In order for the gift to be treated as 50% from each spouse, you would need to file gift tax return Form 709 and elect to "split gifts" with your spouse signing the consent line for gift-splitting. If your spouse did not make any gifts during the year exceeding $16K to any individual, then your spouse would not be required to file his/her own separate gift tax return.

It might be more practical for you to give $16K to your spouse then each of you give $16K to your daughter, thereby avoiding the 709 filing requirement. (note - this would not be a step-transaction)
Curious why that would not be a step transaction?
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stan1
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Re: Would one $32K gift to daughter count for both me and spouse?

Post by stan1 »

Or give $16K from your account now, and another $16K from your account in January 2023 if that would work.
MarkNYC
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Re: Would one $32K gift to daughter count for both me and spouse?

Post by MarkNYC »

marcopolo wrote: Tue Nov 22, 2022 7:29 pm
MarkNYC wrote: Tue Nov 22, 2022 7:10 pm
LaPasionaria wrote: Tue Nov 22, 2022 6:17 pm Would like to gift $32K ($16K + $16K) to daughter from my individual (not joint) Vanguard account since I have more liquidity than spouse. Is this okay to do, i.e., would the one gift count as $16K from me and $16K from him since we are not exceeding max?
Assuming not in a community property state, then no, a gift from property owned by you individually will not automatically be treated as given 50% from each spouse. In order for the gift to be treated as 50% from each spouse, you would need to file gift tax return Form 709 and elect to "split gifts" with your spouse signing the consent line for gift-splitting. If your spouse did not make any gifts during the year exceeding $16K to any individual, then your spouse would not be required to file his/her own separate gift tax return.

It might be more practical for you to give $16K to your spouse then each of you give $16K to your daughter, thereby avoiding the 709 filing requirement. (note - this would not be a step-transaction)
Curious why that would not be a step transaction?
Primarily because there would be no tax consequence to disallowing the transaction, only a superfluous tax return filing consequence. And there would be no "substance over form" issue because both methods would produce the same tax result.
brawlrats
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Re: Would one $32K gift to daughter count for both me and spouse?

Post by brawlrats »

exodusNH wrote: Tue Nov 22, 2022 7:02 pm
LaPasionaria wrote: Tue Nov 22, 2022 6:17 pm Would like to gift $32K ($16K + $16K) to daughter from my individual (not joint) Vanguard account since I have more liquidity than spouse. Is this okay to do, i.e., would the one gift count as $16K from me and $16K from him since we are not exceeding max?
Do you expect to have an estate of between $6M and $12M (when you die? (Those numbers are adjusted up every year.)

If not, there's no issue with gifting more than $16k or $32k. You just need to file a form with your tax return.
Just a minor correction…Form 709 is filed as a separate return. It is not filed as a form with your tax return.
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Lee_WSP
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Re: Would one $32K gift to daughter count for both me and spouse?

Post by Lee_WSP »

marcopolo wrote: Tue Nov 22, 2022 7:29 pm
MarkNYC wrote: Tue Nov 22, 2022 7:10 pm
LaPasionaria wrote: Tue Nov 22, 2022 6:17 pm Would like to gift $32K ($16K + $16K) to daughter from my individual (not joint) Vanguard account since I have more liquidity than spouse. Is this okay to do, i.e., would the one gift count as $16K from me and $16K from him since we are not exceeding max?
Assuming not in a community property state, then no, a gift from property owned by you individually will not automatically be treated as given 50% from each spouse. In order for the gift to be treated as 50% from each spouse, you would need to file gift tax return Form 709 and elect to "split gifts" with your spouse signing the consent line for gift-splitting. If your spouse did not make any gifts during the year exceeding $16K to any individual, then your spouse would not be required to file his/her own separate gift tax return.

It might be more practical for you to give $16K to your spouse then each of you give $16K to your daughter, thereby avoiding the 709 filing requirement. (note - this would not be a step-transaction)
Curious why that would not be a step transaction?
There needs to be an otherwise disallowed tax transaction. Joint gifts from two parents are allowed.
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TomatoTomahto
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Re: Would one $32K gift to daughter count for both me and spouse?

Post by TomatoTomahto »

Just file a 709 indicating that the gift was from both of you. Or, gift $16k this year and up to $17k next year.
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LaPasionaria
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Re: Would one $32K gift to daughter count for both me and spouse?

Post by LaPasionaria »

happysteward wrote: Tue Nov 22, 2022 6:52 pm Do you file a joint tax return with him (your spouse)?
Yes, but we are in PA, not a community-property state so as per other posters it seems like filing a 709 is the thing to do.
Last edited by LaPasionaria on Wed Nov 23, 2022 6:03 pm, edited 1 time in total.
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LaPasionaria
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Re: Would one $32K gift to daughter count for both me and spouse?

Post by LaPasionaria »

MarkNYC wrote: Tue Nov 22, 2022 7:10 pm
LaPasionaria wrote: Tue Nov 22, 2022 6:17 pm Would like to gift $32K ($16K + $16K) to daughter from my individual (not joint) Vanguard account since I have more liquidity than spouse. Is this okay to do, i.e., would the one gift count as $16K from me and $16K from him since we are not exceeding max?
Assuming not in a community property state, then no, a gift from property owned by you individually will not automatically be treated as given 50% from each spouse. In order for the gift to be treated as 50% from each spouse, you would need to file gift tax return Form 709 and elect to "split gifts" with your spouse signing the consent line for gift-splitting. If your spouse did not make any gifts during the year exceeding $16K to any individual, then your spouse would not be required to file his/her own separate gift tax return.

It might be more practical for you to give $16K to your spouse then each of you give $16K to your daughter, thereby avoiding the 709 filing requirement. (note - this would not be a step-transaction)
Wouldn't this be a step-transaction under the "end-result test?" https://www.thetaxadviser.com/issues/20 ... trine.html Your original post sent me on a Google mission to understand step-transactions.
MarkNYC
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Re: Would one $32K gift to daughter count for both me and spouse?

Post by MarkNYC »

LaPasionaria wrote: Wed Nov 23, 2022 5:59 pm
MarkNYC wrote: Tue Nov 22, 2022 7:10 pm
LaPasionaria wrote: Tue Nov 22, 2022 6:17 pm Would like to gift $32K ($16K + $16K) to daughter from my individual (not joint) Vanguard account since I have more liquidity than spouse. Is this okay to do, i.e., would the one gift count as $16K from me and $16K from him since we are not exceeding max?
Assuming not in a community property state, then no, a gift from property owned by you individually will not automatically be treated as given 50% from each spouse. In order for the gift to be treated as 50% from each spouse, you would need to file gift tax return Form 709 and elect to "split gifts" with your spouse signing the consent line for gift-splitting. If your spouse did not make any gifts during the year exceeding $16K to any individual, then your spouse would not be required to file his/her own separate gift tax return.

It might be more practical for you to give $16K to your spouse then each of you give $16K to your daughter, thereby avoiding the 709 filing requirement. (note - this would not be a step-transaction)
Wouldn't this be a step-transaction under the "end-result test?" https://www.thetaxadviser.com/issues/20 ... trine.html Your original post sent me on a Google mission to understand step-transactions.
The IRS would not claim this to be a step-transaction for the reasons I stated upthread. But if you're worried about it or don't agree with me, then make the $32K gift yourself and file a Gift Tax Return Form 709 with a gift-splitting election.
MarkNYC
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Re: Would one $32K gift to daughter count for both me and spouse?

Post by MarkNYC »

happysteward wrote: Tue Nov 22, 2022 6:52 pm Do you file a joint tax return with him (your spouse)?
The filing status used on an individual income tax return is not relevant for gift tax purposes.
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Lee_WSP
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Re: Would one $32K gift to daughter count for both me and spouse?

Post by Lee_WSP »

LaPasionaria wrote: Wed Nov 23, 2022 5:59 pm
MarkNYC wrote: Tue Nov 22, 2022 7:10 pm
LaPasionaria wrote: Tue Nov 22, 2022 6:17 pm Would like to gift $32K ($16K + $16K) to daughter from my individual (not joint) Vanguard account since I have more liquidity than spouse. Is this okay to do, i.e., would the one gift count as $16K from me and $16K from him since we are not exceeding max?
Assuming not in a community property state, then no, a gift from property owned by you individually will not automatically be treated as given 50% from each spouse. In order for the gift to be treated as 50% from each spouse, you would need to file gift tax return Form 709 and elect to "split gifts" with your spouse signing the consent line for gift-splitting. If your spouse did not make any gifts during the year exceeding $16K to any individual, then your spouse would not be required to file his/her own separate gift tax return.

It might be more practical for you to give $16K to your spouse then each of you give $16K to your daughter, thereby avoiding the 709 filing requirement. (note - this would not be a step-transaction)
Wouldn't this be a step-transaction under the "end-result test?" https://www.thetaxadviser.com/issues/20 ... trine.html Your original post sent me on a Google mission to understand step-transactions.
They’d need to show evidence that your spouse would not have independently made the gift to the child, ie you instructed them to do it for the sole purpose of not having to file a 709. Unless it’s an unshared child, that’s a rather tough bar.
RudyS
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Re: Would one $32K gift to daughter count for both me and spouse?

Post by RudyS »

LaPasionaria wrote: Tue Nov 22, 2022 6:17 pm Would like to gift $32K ($16K + $16K) to daughter from my individual (not joint) Vanguard account since I have more liquidity than spouse. Is this okay to do, i.e., would the one gift count as $16K from me and $16K from him since we are not exceeding max?
Can you send the proceeds from VG to a joint checking account, then you and she can write checks to daughter. I don't see that IRS would consider this as a step transaction.
Nahtanoj
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Re: Would one $32K gift to daughter count for both me and spouse?

Post by Nahtanoj »

A similar question - what if you send the money from VG to a joint bank account and then you write a single $32k check to your daughter for the whole amount from the joint bank account? Would that work, or would it trigger a requirement to file the gift tax return?
JackoC
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Re: Would one $32K gift to daughter count for both me and spouse?

Post by JackoC »

RudyS wrote: Thu Nov 24, 2022 11:16 am
LaPasionaria wrote: Tue Nov 22, 2022 6:17 pm Would like to gift $32K ($16K + $16K) to daughter from my individual (not joint) Vanguard account since I have more liquidity than spouse. Is this okay to do, i.e., would the one gift count as $16K from me and $16K from him since we are not exceeding max?
Can you send the proceeds from VG to a joint checking account, then you and she can write checks to daughter. I don't see that IRS would consider this as a step transaction.
That's what we would do, maybe OP has finances so separate there's no joint account. But even sending money from OP account to spouse account, spouse gives to kid, fine IMO. I agree with all previous posts describing why 'step transaction' is a boogey man under the bed not a real consideration in this case. If you gave that much to somebody with no normal, apparent reason to give that much to your kid but they do, the reasonable conclusion is you instructed them to, could be a problem. A parent OTOH has plenty of reason of their own to give to their kid, and if they had to ask somebody else for the money to fund the gift, that doesn't make it a 'step transaction' for that other person.
Last edited by JackoC on Fri Nov 25, 2022 11:59 am, edited 1 time in total.
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Lee_WSP
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Re: Would one $32K gift to daughter count for both me and spouse?

Post by Lee_WSP »

Nahtanoj wrote: Fri Nov 25, 2022 10:38 am A similar question - what if you send the money from VG to a joint bank account and then you write a single $32k check to your daughter for the whole amount from the joint bank account? Would that work, or would it trigger a requirement to file the gift tax return?
MarkNYC has stated that it's current IRS policy to not require a 709 for such a transaction.
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