I can’t seem to find the answer to this. I know that it is far above the gift tax exemption($15k), so she would have to either pay gift tax on $115,000 or income tax on $130,000. All I can find via google search is that it would be taxable & now she is trying to give it back.
But she received the money in October, 2016, so she should have declared it on her 2016 tax return. So did she?
Gift taxes are paid by the giver, not the receiver.
^ It wasn’t a gift. There was a non-disclosure agreement. It was a payment for something in return- silence.
The reason the OP can’t find info on it is probably because it hasn’t been disclosed. Tax returns are not public information.
Right but given how public this whole thing has been, I can’t believe no one has asked her. Or maybe they have & I just can’t find it…
Really? I think it’s the other way around.
A gift tax is a federal tax applied to an individual giving anything of value to another person. For something to be considered a gift, the receiving party cannot pay the giver full value for the gift, but may pay an amount less than its full value.* It is the giver of the gift who is required to pay the gift tax.** The receiver of the gift may pay the gift tax, or a percentage of it, on the giver’s behalf, in the event that the giver has exceeded his/her annual personal gift tax deduction limit.*
Read more: Gift Tax Gift Tax Explained: What It Is and How Much You Can Gift Tax-Free
This may have changed, but I got a modest amount of money once in settlement of a lawsuit–really a threatened suit, it never got to court. I didn’t have have to pay taxes on the settlement. Could the payment have been classified as the settlement of a suit?
Was your case due to injury or sickness? Cases like those can be tax-free. In the Daniels case, probably not.
That was weird:
https://www.bloomberg.com/news/articles/2018-04-13/stormy-daniels-s-silence-isn-t-tax-free
Complicated, but personal injury probably describes it best. Perhaps that’s why. Thanks for the info.
If I understand correctly…I give my child 100k (that I’ve already paid tax on) I’ll owe additional taxes on this same money (in excess of the exclusion) simply because I gifted it. What a crock!
Does the recipient incur any tax obligation?
The recipient of a gift does not generally have any tax liability on the value of the gift.
Well, no, or rather probably not. You’ll have to file a gift tax return. You also have an $11.2 million lifetime exemption, so if you’ve given less than $11.2 million dollars, you should be fine.
This is a policy decision intended to work with the estate tax to curb the accumulation of insanely large hereditary concentrations of wealth. You may disagree with the policy, and certainly there are ways to get around some of the limitations, but it’s certainly a progressive tax in that it’s never going to hit the majority of the population.
Here’s another shocker - if your child uses that money to buy something, he/she will have to pay SALES TAX on top of that! Or if they use it to hire someone, they pay FICA taxes!
It’s taxes all the way down, don’t worry your head about it.
Very informative, thanks.
I need to retract my "crock " sentiment… I have a much better understanding about the actual regulations behind gift taxation laws now. Thanks!
Just a fountain of knowledge aren’t ya? Any more pearls of wisdom?
Sadly Chisquirrel’s comment is basically required here since all too often people think that certain transactions should be magically free of taxes.
When money passes from A to B, it’s a possible opportunity for a government to collect tax. I see no reason whatsoever why gifts/inheritance should be mysteriously excluded from this.
I’m sorry that you see the need to be nasty to someone being helpful here.