Gifted a large sum of money, wat do for taxes?

Skull2185

My mom closed this morning on selling our old house, and I was given a large sum of money from the sale. The money was deposited into a joint bank account we have, and then I transferred my portion to my personal checking and savings accounts. Now, because I worry about everything, I'm already thinking about next years taxes. Is this reportable income for me? Is there a form I need to fill out next year in addition to what I already do with turbo tax? Or is turbo tax cool and already takes care of it for me? Also, is there any thing extra my mom will have to do on her taxes next year?

Djeet

If she gifted it to you you shouldn't be on the hook for any taxes, but she might. She can gift you up to 14K without incurring gift tax. Gifting you 14K per year would be most tax efficient way for her to transfer you wealth. If she gifts more then it starts to eat into her lifetime limit of what she can gift tax-free. If the proceeds went to her and someone else (dad?) then they could each gift you 14K per year with no concern about a gift tax. I am not a tax preparer and she maybe should talk to one or an estate planner.


Edit: I assumed you were speaking of US taxes.

Sir Landshark

The joint account is with you and your spouse? You and your mom? That part is unclear.

As noted above, someone can give anyone else in the US up to 14k without incurring a tax. If your mom is married, her and her spouse could both gift 14k to you, effectively raising the limit to 28k. If you are also married, then the limit goes up to 56k. I'm not sure whether you have to be married or just sharing finances for this to work. I'm also not sure how to handle any gift receipts above the limit, but you will definitely need to report it.

Your mom should not have to do anything extra on her end, regardless.

davidsdurions

If the amount is over $14,000 then your mom is technically responsible for the gift tax for the amount above that. That's the figure for 2015, so it may change for this tax year.

I'm assuming you weren't an owner of the property and that this would be considered a gift from your mom for tax purposes. If so, you'll not have to pay any tax.

Also, as explained here any excess over $14k can be put forward to later year's limits and only after getting to the lifetime max of $5.43 million(!) do taxes actually have to be paid. At that point I'd hope your mom had a tax attorney helping her with the situation.

Skull2185

It's not a crazy amount, but it is over 14K. Thanks for the replies folks!

The joint account is with me and my mom, because she's helping out with some finances because I just bought my own place. I was just talking to her about it, and apparently she has an accountant friend who does her taxes for her(I thought she did them herself) So she'll probably be ok, but I'll pass this info along. I just don't want any hiccups with next year's taxes.

Djeet

There are also a number of items she could direct pay on your behalf and those are excluded from gift tax and estate consideration. The only included expenses I can think of offhand are medical and education but there may be others.

bowen

Djeet wrote: »

There are also a number of items she could direct pay on your behalf and those are excluded from gift tax and estate consideration. The only included expenses I can think of offhand are medical and education but there may be others.

Yeah she could theoretically pay for repairs or other stuff. Edit: This is a 'gray' area though.