Gift tax question

[chisness]

Scenario: someone from the UK gives me (US citizen) a $50,000 wedding gift.

Is there a special gift tax on this or do I simply owe income tax as if my income had increased by the gift value? What about for property? Same thing?

[jively]

[ QUOTE ]
Scenario: someone from the UK gives me (US citizen) a $50,000 wedding gift.

Is there a special gift tax on this or do I simply owe income tax as if my income had increased by the gift value? What about for property? Same thing?

[/ QUOTE ]
You don't have to file anything and you don't owe any tax. You can receive any amount.

-Tom

[squiffy]

http://www.irs.gov/businesses/small/article/0,,id=98968,00.html

http://www.irs.gov/businesses/small/article/0,,id=164872,00.html

[jively]

[ QUOTE ]
http://www.irs.gov/businesses/small/article/0,,id=98968,00.html

http://www.irs.gov/businesses/small/article/0,,id=164872,00.html

[/ QUOTE ]
A. Your links don't work. Use the "URL" link under "Instant UBB Code" when you are creating or editing your message.

B. The gift tax applies to US citizens who give money to others. It does not apply when a US citizen receives it.

-Tom

[Corpsebean]

[ QUOTE ]
[ QUOTE ]
http://www.irs.gov/businesses/small/article/0,,id=98968,00.html

http://www.irs.gov/businesses/small/article/0,,id=164872,00.html

[/ QUOTE ]
A. Your links don't work. Use the "URL" link under "Instant UBB Code" when you are creating or editing your message.

B. The gift tax applies to US citizens who give money to others. It does not apply when a US citizen receives it.

-Tom

[/ QUOTE ]

100% sure on that? And is there a limit?

Hypothetically if I received 100K in 2006 from someone, I don't have to do ANYTHING about it in regards to the IRS.

[jively]

[ QUOTE ]
100% sure on that? And is there a limit?

Hypothetically if I received 100K in 2006 from someone, I don't have to do ANYTHING about it in regards to the IRS.

[/ QUOTE ]
Yes, I am sure. If you hypothetically gave me more than $12K of your gift, you have to file a form (but not pay any tax) and I have to do nothing.

-Tom

[APXG]

Ssshhhh, don't talk about this too much [img]/images/graemlins/wink.gif[/img]

[chisness]

Does the gift giver owe any tax for giving a gift or just for the original income?

[jively]

[ QUOTE ]
Does the gift giver owe any tax for giving a gift or just for the original income?

[/ QUOTE ]
"Original income?" Be careful with words. Let's say my friend earned $1.5 million in 2006, and paid income tax on the income. After tax, he has $1 million that he took out of the bank and has in cash in his closet.

Now in 2007 he gives my $1 million in cash. He owes no tax on it because he paid the tax in 2006, and he has no income in 2007.

For gift tax purposes, he gives me $1 million, and he has to file a gift tax return for 2007 showing that he gave a non-spouse US citizen more than $12,000 for the year. He does not owe any tax.

I take the $1 million tax free. I do not have to file anything.

The $988,000 he gave me over $12,000 starts to use up his unified credit. He won't be able to give much more to non-spouse US citizens over his lifetime before he does have to begin paying the actual gift tax.

Now, why do all the people here have friends giving them more than $12,000 in a year? How can I meet these friends of yours?

-Tom

[APXG]

[ QUOTE ]

The $988,000 he gave me over $12,000 starts to use up his unified credit. He won't be able to give much more to non-spouse US citizens over his lifetime before he does have to begin paying the actual gift tax.


[/ QUOTE ]

Begin paying taxes to who? This guy has nothing to do with the US whatsoever I assume. He paid income tax in his country, now wants to give gifts. Why would this ever be taxed or use up any kind of credit? He's never even heard of the IRS...

Also, a random thought - what if a person loans you $1 mil USD deferred for 99 years (even if he is a US citizen)?