Gifts Tax Free For Recipients
Subject: gift taxesHi,So to clarify the gift tax law.......the recipient has no tax ramifications if the gift is over the legal limit. For instance if I gift someone 12,500 they have no responsibility for any tax on that money?Thankyou,
That is true in almost all cases. However, if you give someone pre-tax money, such as an IRA or other retirement account, that money will be taxable to the recipient. Every other kind of gift of after-tax money is completely free of income tax for the recipient.
However, the giver will have to file a gift tax return (709) to report gifts to any single person in any calendar year in which the total exceeds the annual exemption.
Also, be aware of the fact that gifts do not reduce the taxable income of the giver, a very common misconception that people have.
Before any large size gifting program is implemented, you should work with your personal professional tax advisor to ensure that you understand the rules and implications of what you are doing.