a basic question on the $12,000 gift - As I understand, you can give $12k to a person and not have IRS hassles. Is that true for both the gifter and receiver ?
#1 - Can you give that amount to several different people ? ie - like all the extended family relatives ?
#2 - Is there any IRS issues for "receiving" multiple gifts of $12,000 ? ie - kid receives $12k from each of the grandparents ?
#3 Is there an IRS issue, or reporting of receiving the $12k gift ?
The $12K/yr gift is pretty simple. No issues. It's not limited to family. You are welcome to give this gift to friends, neighbors, and people who give you advice on the internet. There is no reporting as long as you stick to the $12K limit. The multiple recipient/giver creates an opportunity for an elderly, well off couple to gift $24K (as a couple) to each child, child-in-law, grandchild, and grandchild-in-law. Do the math, just two children, four grandchildren, that's 6 recipients and spouses, so 12 in all. $288K/yr.
The one addition to this - paying for college. A parent or anyone may pay, directly to the school, the full tuition, without regard to the $12K limit. Also, a 529 account can be funded up to 5 years' in advance, so in any year one can elect to gift $60K, and count it as fulfilling just the $12K limit for the next five years.
Not knowing the source of your question, there may be other remarks/advice to offer (for example, you can't give away all your money, and claim poverty for purpose of going into a nursing home. Or to avoid a lawsuit claim. So the proper answer has to ask back, "what is your motive/goal?")
JOE JoeTaxpayer.com
I just found this on the IRS web site:
Gift Taxes
IRS Tax Tip 2006-14
If you gave any one person gifts in 2005 that valued at more than $11,000, you must report the total gifts to the Internal Revenue Service and may have to pay tax on the gifts.
The person who receives your gift does not have to report the gift to the IRS or pay gift or income tax on its value.
Gifts include money and property, including the use of property without expecting to receive something of equal value in return. If you sell something at less than its value or make an interest-free or reduced-interest loan, you may be making a gift.
This was for 2005 as noted above. The 2006 limit was raised to $12,000. Joe
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