Nothing in life is as certain as death and taxes.
Do you owe tax on gifts from your parents?
Your parents have made wise financial decisions.
They now have a decent amount of money.
Maybe you are struggling a bit financially right now.
Maybe you are fine financially.
Either way, your parents gift you money.
Your parents love you.
Thanks, mom and dad . . . but . . . do I owe taxes on this gift?
The Short answer is NO.
These lifetime gifts made to you by your parents (or others) are not considered income to you.
As a result, the gifts will neither be taxed as income nor will they put you into a higher tax bracket.
Will you parents owe taxes?
If they give more than the annual exclusion amount to an individual, then yes.
How much is the annual exclusion amount?
In 2018, it is $15,000.
They or you can give this amount to any number of people in a year. Gifts for all!
What if their gift exceeds this amount?
Your parent will need to file a gift tax return (Form 709) and claim any gift exceeding the exclusion amount as a reduction against his or her future estate tax exemption.
With the federal estate tax exemption now sitting at $11,220,000 per person in 2018, this will not likely be a problem.
YES . . .you can give away over 11 Million Dollars during your life and not pay taxes on those gifts.
Can your parent claim a deduction on a gift to you, your children, or anyone else?
Deductions are allowed on charitable donations, but not on gifts to people.
To take a deduction on charitable donation, donations must be itemized.
Your parents should work with an experienced estate planning attorney to be sure their gifts align with their estate planning goals. 817.638.9016