My mother gave me $50,000 and also wrote a gift letter ($50,000) to the bank assisting to apply mortgage for my apartment in April, 2017.
I felt bad to take my mom's money. After moving in the new apartment, I sold my car & I was able to return her with a check $36,000 two weeks ago.
My questions are as follow:
1. Will my mother still need to file & pay gift tax in 2017.
2. After receiving $36,000 from me, can it reverse the tax penalty?
2. My mother is married. What is her gift tax limit for this instance?
Please advise, thank you.
Like I said - unless your mother has gifted millions of dollars over the course of her life - she will not have to pay any taxes. But if she did have to pay, it would be the final tax return upon death.
However - do check to see if there are any state or county tax laws regarding gifts where you both live. It’s highly unlikely that there are - but just in case. The gift tax situation I’m referring to is for federal taxes - but that usually covers all bases. It would be unusual- as I said - that there would be a state or county gift tax. Unusual but not impossible.
When you file your taxes for 2017 you should file a gift tax form for the $36,000 you gave your mother.
The last time I looked - about a year or so ago - the total amount gifted over the life time needed to be in the millions of dollars before paying a tax is required.
Unless your financial contemporaries include Bill Gates and Warren Buffet- you are probably in the clear.
Still - the IRS likes gift givers giving over the annual lump sum of about $14,000 per person - to file a gift tax form. I guess they like to keep a running total - lol! Unfortunately, most accountants charge per form so if a professional tax accountant does the taxes of the gift giver - they’ll charge a bit more. Amounts gifted per person under the annual allowable sum does not need to be reported.
However - laws may vary slightly from state to state so it’s probably a good idea to varify this information with you local tax guy or gal.