Tax implications for "gifting" $$

[Yoni Haiminis]

I am planing on Gifting a family member some $$ to help them with the purchase of an investment property. I was trying to find out if the IRS has any limits on this and if so how does it affect both my tax return and the person receiving the gift's tax return?  Do they have to clam it as income or is it truly a "gift"?

We are looking to do a $30K gift.  Not sure if State Rules apply but if so we are located in Massachusetts

Any info is greatly appreciated

[Lance Lvovsky]

You can make an annual gift of $14k and not worry about any filing requirements. If you are married, this number jumps to $28k. If the family member is married, then you and your spouse can effectively gift up to $56k per year under the annual gift tax exclusions.

The annual gift tax exclusion is 14k. As such, let's say you are not married and the recipient is not married, and you do give a $30,000 gift. You would need to file a gift tax return, Form 709 reporting the $30,000 gift. The first $14k uses your annual exclusion. The remaining 16k is considered a "taxable gift", but you won't pay any gift tax since "taxable gifts" reduce your lifetime exclusion (approx 5.5 million indexed for inflation).

You should make sure your CPA is aware of all the gift tax laws. The recipient of a gift does not have to include the gift as income on their income tax return.