If you have received a gift of money or other property that has value from your parents, grandparents, or other family member, you can be thankful that your family cares about you and wants to give you something that you can use to help better your life. However, you may not be aware that the Internal Revenue Service, the branch of the US government devoted to collecting taxes on any income received by a US citizen, may also be interested in the gift that you have received, the value of that gift, and the potential for collecting taxes on the value of that gift, since under IRS gift tax rules it can be considered income. As such, it is important to understand when you need to file a gift tax form with the IRS if you are the recipient of a gift?
Filing an IRS Gift Tax Return
The rules for whether or not you will need to file a gift tax form with the IRS begin with considering the amount of the gift that you have received.
- In general, as of 2009, the gift tax does not begin until you have gifted away or received as a single donee an amount exceeding $13,000.
- The giver does not have to file a gift tax for money or property given worth less than this amount, and the recipient does not have to report this gift as long as the total tax year gift amount from this same donor does not exceed $13,000 (for a single person) or $26,000 if you are a married couple receiving the gift jointly.
- However, if you have received more than $13,000, or if you have donated more than $13,000 in money or property to a single individual during the year, you should probably file the federal gift tax form, IRS form 709. While you may not be required to pay any taxes on this gift, filing the form will help the person that you have given the money or property to, as it will show that you gave them the property if there is any dispute with the IRS later on about their own finances or the gift in question.
Since the limit on giving to an individual is fairly high, most people will not have to file a gift tax form as either a donor or a recipient. However, if you are considering giving personal property or even selling it to family at a reduced price, you will want to speak with tax lawyer about whether or not your pricing could be considered a gift by the IRS, and consider filing the gift tax form as well.