Giving money....Will this work?

[Dewey_Finn]

@Leaffan

Out of curiosity, how much gift tax would one pay on a $100,000 gift in the US?

Nothing, as long as the total amount of gifts over one’s lifetime does not exceed the limit (currently about $5.3 million).

[Leaffan]

@Dewey_Finn

Nothing, as long as the total amount of gifts over one’s lifetime does not exceed the limit (currently about $5.3 million).

Well, that’s a lifetime exemption, but as I understand it, any gift over $14,000 given to someone in one tax year is taxable, no? So, I guess my question becomes “how much tax on an $86,000 gift does one pay?”

[silenus]

As I understand it, the recipient of the gift doesn’t pay any taxes on it, but the giver does (if it exceeds the huge lifetime limit.) So the kids would still get the full amount you want to give them in any case. Only you would be on the hook for taxes.

[silenus]

@Leaffan

Well, that’s a lifetime exemption, but as I understand it, any gift over $14,000 given to someone in one tax year is taxable, no? So, I guess my question becomes “how much tax on an $86,000 gift does one pay?”

I’m probably missing a ton of exemptions, but my reading of Form 907 shows that you’d pay about $19,880 of a gift that size. That can’t be right, can it?

[Oddball_92]

@ALOHA_HATER

You’re not asking this in the hypothetical. Do you file fraudulent returns because you “don’t want to pay” income taxes? I’m sure you don’t. Imagine a very rich man giving his children a million or a hundred million dollars. Should that windfall be tax-free because he doesn’t want to pay?

Just get an accountant and set it up so you pay less but it’s legal. That way you still get to be a member of society, and your kids still get most of a hundred thousand dollars. God forbid lose a percentage point of their hundred thousand dollars to fund the government that created the system that allowed their family to become wealthy.

1. Actually you do not know why I am asking so you cannot say if it is hypothetical or not.

2. I do not file fraudulent returns at all… for any reason.

3. If a person honestly (legally) works and earns that money, then yes…it is his (or hers) and he/she should be able to do with it as he/she pleases. Yes that “windfall” should be tax free. The government has no right to it.

4. I don’t give a crap about “funding the government” a second time. That money was taxed when it was earned in the first place.

5. The government created the system??? The government didn’t create shit. It is We the people who created it.

6. Most wealthy people are so because: (A) They got an education, (B) They stayed out of legal trouble, (C) They are driven and worked very hard (D) were not afraid to take calculated risks and (E) had some good luck along the way.

7. I am a member of society regardless if I am wealthy or a professional welfare recipient.

[Colibri]

Legal advice is best suited to IMHO.

Note: Please don’t provide advice on how to break or evade the law.

Colibri
General Questions Moderator

[Oddball_92]

@silenus

I’m probably missing a ton of exemptions, but my reading of Form 907 shows that you’d pay about $19,880 of a gift that size. That can’t be right, can it?

I think it can be right

[Labdad]

@Leaffan

Well, that’s a lifetime exemption, but as I understand it, any gift over $14,000 given to someone in one tax year is taxable, no? So, I guess my question becomes “how much tax on an $86,000 gift does one pay?”

You don’t pay gift tax on gifts over $14,000 until you have used up your lifetime exemption.

So if you gave someone $114,000 in a single year, your exemption has been reduced by $100,000. You could do this 53 times. Then your exemption would be used up. The next time you gave someone in excess of $14,000, YOU (not the person who received the gift) would have to pay around 45% of the amount you gave over $14,000 in gift tax.

Here is a pretty good basic explanation.

[Leaffan]

@Labdad

You don’t pay gift tax on gifts over $14,000 until you have used up your lifetime exemption.

So if you gave someone $114,000 in a single year, your exemption has been reduced by $100,000. You could do this 53 times. Then your exemption would be used up. The next time you gave someone in excess of $14,000, YOU (not the person who received the gift) would have to pay around 45% of the amount you gave over $14,000 in gift tax.

Here is a pretty good basic explanation.

Got it.

So the OP’s kids won’t have to pay tax at all on the $200,000 gifts, but the OP just used up $172,000 of his $5.25 M, unless the kids just withdraw $14,000 a year.

I’m glad there’s no gift or estate tax in Canada!

ETA: Not that I’ll ever have to worry about ~$5M.

[RTFirefly]

@Leaffan

ETA: Not that I’ll ever have to worry about ~$5M.

Exactly. The only Americans who have to worry about estate and gift taxes are the handful of people who have managed to amass that sort of personal wealth.

[ALOHA_HATER]

@Oddball_92

1. Actually you do not know why I am asking so you cannot say if it is hypothetical or not.

2. I do not file fraudulent returns at all… for any reason.

3. If a person honestly (legally) works and earns that money, then yes…it is his (or hers) and he/she should be able to do with it as he/she pleases. Yes that “windfall” should be tax free. The government has no right to it.

4. I don’t give a crap about “funding the government” a second time. That money was taxed when it was earned in the first place.

5. The government created the system??? The government didn’t create shit. It is We the people who created it.

6. Most wealthy people are so because: (A) They got an education, (B) They stayed out of legal trouble, (C) They are driven and worked very hard (D) were not afraid to take calculated risks and (E) had some good luck along the way.

7. I am a member of society regardless if I am wealthy or a professional welfare recipient.

We the people created it; we the people ARE the government. Deserve’s got nothing to do with wealth in the context of this discussion. One should pay a gift tax if they owe it. You pay what you owe and can’t loophole different kinds of taxes away because you don’t agree with it.

Here’s what I mean by being a member of society. You drive from your tax-written-off home in your incidentally-subsidized sedan with your deductible-donation bumper sticker, over a US highway and past a DOT stoplight–which the government paid for. And you pay your taxes, because without this government, the society which is enmeshed with the company you work for (and everything else) will fail. That’s the bargain.

You get 911, FDIC-insured deposits, and water piped into your home… and you pay your taxes. Or you opt out and go live in the woods. That’s the bargain.

[Duckster]

@Oddball_92

4. I don’t give a crap about “funding the government” a second time. That money was taxed when it was earned in the first place.

It would not be the first time the government can (and will) double-tax its citizens.

[silenus]

*If you drive a car, I’ll tax the street
If you try to sit, I’ll tax your seat
If you get too cold I’ll tax the heat
If you take a walk, I’ll tax your feet

Taxman!*

[Leaffan]

The tax man’s taken all my dough,
And left me in my stately home,
Lazing on a sunny afternoon.
And I can’t sail my yacht,
He’s taken everything I’ve got,
All I’ve got’s this sunny afternoon.
Sunny Afternoon

[Namkcalb]

@ALOHA_HATER

Just get an accountant and set it up so you pay less but it’s legal. That way you still get to be a member of society, and your kids still get most of a hundred thousand dollars. God forbid lose a percentage point of their hundred thousand dollars to fund the government that created the system that allowed their family to become wealthy.

Are you a Nigerian prince by any chance?