Avoiding estate tax by giving multiple gifts
From my understanding in the US, a father can give an individual gift of $15,000 to a child (or anyone) without any tax liabilities and without impacting the lifetime allowance. If the father wants to give more money, can he make a gift to a third party he trusts (e.g., his brother/uncle of his son) who then makes a gift to the child, or is that tax fraud?
united-states gift-tax estate-planning
asked 9 hours ago
StrongBadStrongBad
720516
add a comment |
From my understanding in the US, a father can give an individual gift of $15,000 to a child (or anyone) without any tax liabilities and without impacting the lifetime allowance. If the father wants to give more money, can he make a gift to a third party he trusts (e.g., his brother/uncle of his son) who then makes a gift to the child, or is that tax fraud?
united-states gift-tax estate-planning
asked 9 hours ago
StrongBadStrongBad
720516
6
The rule of thumb on questions like this is, if you thought of this clever trick, there's good odds that someone else has already thought of it, and that it's been brought to the attention of the IRS at some point, and they are aware of it and know how to deal with people trying to be clever by doing this thing to screw them out of their tax revenue.
– Mason Wheeler
7 hours ago
Precisely, @MasonWheeler .
– Fattie
6 hours ago
add a comment |
From my understanding in the US, a father can give an individual gift of $15,000 to a child (or anyone) without any tax liabilities and without impacting the lifetime allowance. If the father wants to give more money, can he make a gift to a third party he trusts (e.g., his brother/uncle of his son) who then makes a gift to the child, or is that tax fraud?
united-states gift-tax estate-planning
asked 9 hours ago
StrongBadStrongBad
720516
From my understanding in the US, a father can give an individual gift of $15,000 to a child (or anyone) without any tax liabilities and without impacting the lifetime allowance. If the father wants to give more money, can he make a gift to a third party he trusts (e.g., his brother/uncle of his son) who then makes a gift to the child, or is that tax fraud?
united-states gift-tax estate-planning
united-states gift-tax estate-planning
asked 9 hours ago
StrongBadStrongBad
720516
asked 9 hours ago
StrongBadStrongBad
720516
asked 9 hours ago
StrongBadStrongBad
720516
asked 9 hours ago
StrongBadStrongBad
720516
asked 9 hours ago
StrongBadStrongBad
720516
720516
6
The rule of thumb on questions like this is, if you thought of this clever trick, there's good odds that someone else has already thought of it, and that it's been brought to the attention of the IRS at some point, and they are aware of it and know how to deal with people trying to be clever by doing this thing to screw them out of their tax revenue.
– Mason Wheeler
7 hours ago
Precisely, @MasonWheeler .
– Fattie
6 hours ago
add a comment |
6
The rule of thumb on questions like this is, if you thought of this clever trick, there's good odds that someone else has already thought of it, and that it's been brought to the attention of the IRS at some point, and they are aware of it and know how to deal with people trying to be clever by doing this thing to screw them out of their tax revenue.
– Mason Wheeler
7 hours ago
Precisely, @MasonWheeler .
– Fattie
6 hours ago
6
6
The rule of thumb on questions like this is, if you thought of this clever trick, there's good odds that someone else has already thought of it, and that it's been brought to the attention of the IRS at some point, and they are aware of it and know how to deal with people trying to be clever by doing this thing to screw them out of their tax revenue.
– Mason Wheeler
7 hours ago
The rule of thumb on questions like this is, if you thought of this clever trick, there's good odds that someone else has already thought of it, and that it's been brought to the attention of the IRS at some point, and they are aware of it and know how to deal with people trying to be clever by doing this thing to screw them out of their tax revenue.
– Mason Wheeler
7 hours ago
Precisely, @MasonWheeler .
– Fattie
6 hours ago
Precisely, @MasonWheeler .
– Fattie
6 hours ago
add a comment |
1 Answer
1
active
oldest
votes
If you give a gift with stings attached, then it isn't a gift. Thus it would be viewed as trying to get around the tax law. The law regarding this is the Step Transaction Doctrine.
But a spouse can also give a gift, and you can give a gift to your child's spouse. Thus a couple can give another couple 4x the limit each year.
If the child is in school then the giver can pay tuition directly and not worry about the limit. They can't send it to the student, they have to send it to the school.
Of course exceeding the limit in a year, does require paperwork, but the lifetime allowance is $11.4M as of 2019. Current tax law has this number adjust for inflation. If this is is something to worry about, consult a tax attorney to see how to do this legally.
edited 8 hours ago
JoeTaxpayer♦
146k23236473
answered 9 hours ago
mhoran_psprepmhoran_psprep
69.4k896175
4
Nice. The first sentence is key to so many gift questions...
– TTT
8 hours ago
1
There were a couple things I'd have posted, but 2 minor points don't make a full answer. If my edits are unwelcome, you can roll back. I won't take offense.
– JoeTaxpayer♦
8 hours ago
1
@JoeTaxpayer the step transaction stuff is perfect.
– StrongBad
8 hours ago
2
The first sentence isn't categorically true; in particular, it's routine for charitable gifts to come with instructions on how they must be used (particular scholarships, particular sorts of needy recipients, etc.).
– chrylis
4 hours ago
add a comment |
protected by JoeTaxpayer♦ 7 hours ago
Thank you for your interest in this question.
Because it has attracted low-quality or spam answers that had to be removed, posting an answer now requires 10 reputation on this site (the association bonus does not count).
Would you like to answer one of these unanswered questions instead?
1 Answer
1
active
oldest
votes
1 Answer
1
active
oldest
votes
active
oldest
votes
active
oldest
votes
If you give a gift with stings attached, then it isn't a gift. Thus it would be viewed as trying to get around the tax law. The law regarding this is the Step Transaction Doctrine.
But a spouse can also give a gift, and you can give a gift to your child's spouse. Thus a couple can give another couple 4x the limit each year.
If the child is in school then the giver can pay tuition directly and not worry about the limit. They can't send it to the student, they have to send it to the school.
Of course exceeding the limit in a year, does require paperwork, but the lifetime allowance is $11.4M as of 2019. Current tax law has this number adjust for inflation. If this is is something to worry about, consult a tax attorney to see how to do this legally.
edited 8 hours ago
JoeTaxpayer♦
146k23236473
answered 9 hours ago
mhoran_psprepmhoran_psprep
69.4k896175
4
Nice. The first sentence is key to so many gift questions...
– TTT
8 hours ago
1
There were a couple things I'd have posted, but 2 minor points don't make a full answer. If my edits are unwelcome, you can roll back. I won't take offense.
– JoeTaxpayer♦
8 hours ago
1
@JoeTaxpayer the step transaction stuff is perfect.
– StrongBad
8 hours ago
2
The first sentence isn't categorically true; in particular, it's routine for charitable gifts to come with instructions on how they must be used (particular scholarships, particular sorts of needy recipients, etc.).
– chrylis
4 hours ago
add a comment |
If you give a gift with stings attached, then it isn't a gift. Thus it would be viewed as trying to get around the tax law. The law regarding this is the Step Transaction Doctrine.
But a spouse can also give a gift, and you can give a gift to your child's spouse. Thus a couple can give another couple 4x the limit each year.
If the child is in school then the giver can pay tuition directly and not worry about the limit. They can't send it to the student, they have to send it to the school.
Of course exceeding the limit in a year, does require paperwork, but the lifetime allowance is $11.4M as of 2019. Current tax law has this number adjust for inflation. If this is is something to worry about, consult a tax attorney to see how to do this legally.
edited 8 hours ago
JoeTaxpayer♦
146k23236473
answered 9 hours ago
mhoran_psprepmhoran_psprep
69.4k896175
4
Nice. The first sentence is key to so many gift questions...
– TTT
8 hours ago
1
There were a couple things I'd have posted, but 2 minor points don't make a full answer. If my edits are unwelcome, you can roll back. I won't take offense.
– JoeTaxpayer♦
8 hours ago
1
@JoeTaxpayer the step transaction stuff is perfect.
– StrongBad
8 hours ago
2
The first sentence isn't categorically true; in particular, it's routine for charitable gifts to come with instructions on how they must be used (particular scholarships, particular sorts of needy recipients, etc.).
– chrylis
4 hours ago
add a comment |
If you give a gift with stings attached, then it isn't a gift. Thus it would be viewed as trying to get around the tax law. The law regarding this is the Step Transaction Doctrine.
But a spouse can also give a gift, and you can give a gift to your child's spouse. Thus a couple can give another couple 4x the limit each year.
If the child is in school then the giver can pay tuition directly and not worry about the limit. They can't send it to the student, they have to send it to the school.
Of course exceeding the limit in a year, does require paperwork, but the lifetime allowance is $11.4M as of 2019. Current tax law has this number adjust for inflation. If this is is something to worry about, consult a tax attorney to see how to do this legally.
edited 8 hours ago
JoeTaxpayer♦
146k23236473
answered 9 hours ago
mhoran_psprepmhoran_psprep
69.4k896175
If you give a gift with stings attached, then it isn't a gift. Thus it would be viewed as trying to get around the tax law. The law regarding this is the Step Transaction Doctrine.
But a spouse can also give a gift, and you can give a gift to your child's spouse. Thus a couple can give another couple 4x the limit each year.
If the child is in school then the giver can pay tuition directly and not worry about the limit. They can't send it to the student, they have to send it to the school.
Of course exceeding the limit in a year, does require paperwork, but the lifetime allowance is $11.4M as of 2019. Current tax law has this number adjust for inflation. If this is is something to worry about, consult a tax attorney to see how to do this legally.
edited 8 hours ago
JoeTaxpayer♦
146k23236473
answered 9 hours ago
mhoran_psprepmhoran_psprep
69.4k896175
edited 8 hours ago
JoeTaxpayer♦
146k23236473
edited 8 hours ago
JoeTaxpayer♦
146k23236473
edited 8 hours ago
JoeTaxpayer♦
146k23236473
146k23236473
answered 9 hours ago
mhoran_psprepmhoran_psprep
69.4k896175
answered 9 hours ago
mhoran_psprepmhoran_psprep
69.4k896175
answered 9 hours ago
mhoran_psprepmhoran_psprep
69.4k896175
69.4k896175
4
Nice. The first sentence is key to so many gift questions...
– TTT
8 hours ago
1
There were a couple things I'd have posted, but 2 minor points don't make a full answer. If my edits are unwelcome, you can roll back. I won't take offense.
– JoeTaxpayer♦
8 hours ago
1
@JoeTaxpayer the step transaction stuff is perfect.
– StrongBad
8 hours ago
2
The first sentence isn't categorically true; in particular, it's routine for charitable gifts to come with instructions on how they must be used (particular scholarships, particular sorts of needy recipients, etc.).
– chrylis
4 hours ago
add a comment |
4
Nice. The first sentence is key to so many gift questions...
– TTT
8 hours ago
1
There were a couple things I'd have posted, but 2 minor points don't make a full answer. If my edits are unwelcome, you can roll back. I won't take offense.
– JoeTaxpayer♦
8 hours ago
1
@JoeTaxpayer the step transaction stuff is perfect.
– StrongBad
8 hours ago
2
The first sentence isn't categorically true; in particular, it's routine for charitable gifts to come with instructions on how they must be used (particular scholarships, particular sorts of needy recipients, etc.).
– chrylis
4 hours ago
4
4
Nice. The first sentence is key to so many gift questions...
– TTT
8 hours ago
Nice. The first sentence is key to so many gift questions...
– TTT
8 hours ago
1
1
There were a couple things I'd have posted, but 2 minor points don't make a full answer. If my edits are unwelcome, you can roll back. I won't take offense.
– JoeTaxpayer♦
8 hours ago
There were a couple things I'd have posted, but 2 minor points don't make a full answer. If my edits are unwelcome, you can roll back. I won't take offense.
– JoeTaxpayer♦
8 hours ago
1
1
@JoeTaxpayer the step transaction stuff is perfect.
– StrongBad
8 hours ago
@JoeTaxpayer the step transaction stuff is perfect.
– StrongBad
8 hours ago
2
2
The first sentence isn't categorically true; in particular, it's routine for charitable gifts to come with instructions on how they must be used (particular scholarships, particular sorts of needy recipients, etc.).
– chrylis
4 hours ago
The first sentence isn't categorically true; in particular, it's routine for charitable gifts to come with instructions on how they must be used (particular scholarships, particular sorts of needy recipients, etc.).
– chrylis
4 hours ago
add a comment |
protected by JoeTaxpayer♦ 7 hours ago
Thank you for your interest in this question.
Because it has attracted low-quality or spam answers that had to be removed, posting an answer now requires 10 reputation on this site (the association bonus does not count).
Would you like to answer one of these unanswered questions instead?
6
The rule of thumb on questions like this is, if you thought of this clever trick, there's good odds that someone else has already thought of it, and that it's been brought to the attention of the IRS at some point, and they are aware of it and know how to deal with people trying to be clever by doing this thing to screw them out of their tax revenue.
– Mason Wheeler
7 hours ago
Precisely, @MasonWheeler .
– Fattie
6 hours ago