I am frequently asked different variations of the following question:
“If my parents gave us a $50,000 gift to help with the purchase of a home, is that taxable?”
Here’s the great news:
If you are on the receiving end of a gift, that present is generally not taxable – no matter how much you receive!
However, while it’s fairly simple from your end, things can get a little more complicated from the giver’s perspective.
Can you believe the GIVER may have to file a separate tax return, and in some situations may actually owe money?
As of 2022, a person can give away $12,060,000 of their money – throughout their lifetime – without having to pay any “gift taxes.”
However, if you gift more than $16,000 to any single person in ONE year, the giver will likely need to file a separate gift tax return (Form 709).
A married couple is allowed to give up to $32,000 per recipient.
These gift tax returns will generally not have any money owed with them (assuming you’re below the $12,060,000 lifetime threshold), but if the giver does not file them, the IRS can impose penalties – even though there is no money owed!
Although “it is better to give than to receive,” the IRS has made things more complicated for those looking to do a good deed.