How much money can your parents give you yearly without being taxed?

Asked almost 4 years ago - Grand Blanc, MI

My mother is 86 and has $50,000.00 in bank account. Can she split this with her four children?

Attorney answers (5)

  1. Leo T. McGrath

    Contributor Level 7

    Answered . Presently the IRS limit is $13,000.00 per person, per year. So, she may gift up to $13,000 per child if she wishes. However, this will have adverse effects if she later needs Medicaid (nursing home) assistance. You may wish to consult an elder law attorney in your area.

    LEGAL DISCLAIMER: The above is not legal advice and I am not your lawyer and you are not my client. The laws of every state are different and, in fact, I am not licensed in MI. My answering this one question does not create an attorney-client relationship between us and I am answering this only according to AVVO rules.

  2. Steven J. Fromm

    Contributor Level 20

    Answered . I agree with the prior attorney. Note that what we are talking about as far as the $13,000 exclusion per donee per annum is gift tax. So she can gift to each of you this amount and not use up her lifetime $1,000,000 gift tax exclusion. From an income tax perspective, gifts are not taxable income so none of you need report this gift on your income tax return. Finally, note that this $13,000 is indexed for inflation, but the IRS has announced that for 2011 the amount remains at $13,000.

    Hope this helps. If you think this post was helpful, please check the thumbs up (helpful) tab below and/or designate my answer as best answer. Thanks.
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  3. Henry Daniel Lively

    Contributor Level 20

    Answered . Your mother can give a gift of $13,000 per child per year. If she is married she can do a split gift with her husband and double it to $$26,000. She also has a lifetime exclusion of $1 Million for gifts that exceed this amount.

    Any individual seeking legal advice for their own situation should retain their own legal counsel as this response provides information that is general in nature and not specific to any person's unique situation. Circular 230 Disclaimer - Advice given in this response cannot be used to eliminate penalties with the IRS or any other governmental agency.

  4. James Elliot Pratt

    Contributor Level 12

    Answered . If your mother is married, your parents can each give $13,000 per child donee for a total of $26,000 per child. Given there is only $50,000 in the account, there may be less than the $13,000 limit to apply to each child if only your mother is making gifts.

    DISCLAIMER & IRS Circular 230 DISCLOSURE:

    The information in this answer is for general information purposes only. Nothing on this communication should be taken as legal advice for any case or situation. Nothing herein is intended as legal advice. You should not rely upon any information as a source of legal advice, and your receipt or viewing of any such information does not create an attorney-client relationship between you and James E. Pratt.

    IRS Circular 230 Disclosure: To comply with requirements imposed by the IRS, we inform you that any U. S. federal tax advice contained herein (including any attachments), unless specifically stated otherwise, is not intended or written to be used, and cannot be used, for the purposes of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter herein.

  5. William Martin Burbank

    Contributor Level 12

    Answered . This is only an issue if your parents have more than 1,000,000 in assets at their death. If your parents are unlikely to have less than $1,000,000 at their death then they can give you as much as they want and not worry about any federal tax. I see so many people unnecessarily worry about this with "small" estates that are not going to be subject to tax. That said, there are other tax issues that should be considered--especially capital gains tax. If your parents give you an appreciated asset during their lifetime and you subsequently sell it you will have to pay capital gains tax, if however you inherit the same asset it will not be subject to capital gains tax is you sell it for what it was worth on the day your parent died.

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