| Gift tax confusion…read on:
READER QUESTION:
My son and I have a joint savings account. He lives in Texas and is buying a house. I sent him $19,000 from my checking account. Can he withdraw from our joint savings account? Will he have to declare it a gift and pay tax on it? Thank you so much for your help.
MY RESPONSE:
I get questions like this all the time. There is general confusion about gift taxes. Here is what you need to know:
- New York has no gift tax.
- The federal government does not tax you until you give away more than about $14,000,000 in your lifetime.
- The $19,000 per year per person gift tax exclusion is a reporting requirement, not a tax trigger. If you give away more than $19,000 per person per year you are supposed to file a gift tax return so that the government can keep track of your lifetime gifts and start to tax you when you exceed $14,000,000.
Therefore, the $19,000 check you gave your son was not reportable. Any amount he withdraws from the joint savings account in the same year is reportable. As an estate planning attorney, I must advise you to file that return even if there is no tax. I will also tell you that most people would never file a return if they will never get anywhere near $14,000,000 in gifts during their lifetime. 😊
Either way, your son will pay no tax because the donee of the gift does not pay gift tax. Also, there is no income tax on the receipt of a gift! |
