Ah. When my parents gave a car to me and my husband, they gave it just to me. Because the state i lived in at the time did the same thing with “book value” of the car, except they explicitly excluded sales to daughters and a list of other close relatives. So i didn’t have to pay the sales tax on the gifted car.
Anyway, as others have said, if it’s less than this year’s gift tax exclusion ($18k) the IRS doesn’t care and there’s no requirement to tell the feds anything.
Yep, in Kansas you pay personal property tax on your vehicles when you renew your tags every year, and that is based on the state’s valuation of the vehicle. So you may only pay sales tax on the $5000 you paid for the vehicle, but your property tax every year is going to be based on the $17K or whatever the state says it’s worth.
My parents gave me my dads old Opal Kadet when I turned 16. It was my car, but the title and insurance weren’t put in my name. I was probably added to their insurance? I don’t remember.
There was no discusion about additional taxes.
Giving a teenager a used car was common in my generation. We didn’t cross the threshold to owe income tax with a part-time, after school job.
My parents paid for college. That wasn’t taxed to me either.
So if I understand you correctly, it was “yours” in the sense that you drove it but not legally? There would never be any sort of tax due in that situation.
Although the OP mentions the IRS , the tax involved in the transfer of a car would be sales/use tax ( if there is such a tax in the state). Often gifts between certain relatives are exempt, and there may be provisions for below-market sales to relatives to pay on the actual price rather than book value - but a lot of states won’t charge me tax on the $500 the bill of sale says I paid you. They will charge me the sales tax on the market value of the car.
I was driving legally at 16. I was covered under my parents insurance.
There wasn’t any reason to transfer the title while I still lived at home.
I bought my own gas and paid for minor maintenance. My biggest expenses were replacing the alternator and battery.
I drove that car at college. It was in the same state. I don’t remember when the title was transfered. Probably after I turned 18.
Here in Illinois, my mother recently gave me her car, and IIRC when I went to the DMV(-equivalent) to transfer the title, they charged me a nominal $15 in lieu of sales tax.
I wasn’t talking about whether you were driving it legally - my point is that your parents didn’t transfer the title to you when you turned 16 and you therefore didn’t actually own the car . Your parents still owned it which means no tax of any kind would be due as there was neither a sale nor a gift. What was understood in your family about who the car belonged to is a separate issue from who legally owned it . If the title was later transferred to you , there might have been tax then (depending on your state)