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How much money can you give your children yearly without penalty?

Grand Blanc, MI |

My mother has $60,000 in savings. How much money can she give to her four children without repercussions?

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Attorney answers 3

Posted

She has a $13,000 annual gift exclusion per child before having to file a gift tax return, and a $1 million lifetime exclusion for gift taxes if she goes over that amount. She will need to file a gift tax return in that case but will not owe any gift taxes up to $1 million.

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.

Posted

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.

Posted

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.

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Circular 230 Disclaimer - Any information in this comment may not be used to eliminate or reduce penalties by the IRS or any other governmental agency.

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