Gifts can be taxed but the laws regarding gift taxes are some of the most misunderstood laws around. A gift tax is generally imposed on the giver. For the purposes of annual tax returns, any gift of money given to an individual over $15,000 is taxable.
A family member may wish to gift a child this sum of money as a means of giving them their inheritance in payments rather than all in one lump sum following their death. If the latter occurs, the child would be required to pay taxes on the inheritance which would be much more substantial. It is less expensive for a person to follow the gift tax rules in this situation.
As to divorces, the problem can arise as to whether the money received was a gift or a loan. If a husband’s family gives him $15,000 a year and pays the gift tax on it, the money could become marital property. If the husband divorces the wife, she may be able to claim her half of this gift if this was the case.
Things like this can become tricky depending on state laws. However, the divorcing couple would not have to worry about ever paying a tax on the received money because that responsibility is on the giver of the gift and not the recipient.
Some things are considered non-taxable for both married or divorced couples. These include things like gifts that do not exceed what is known as the annual exclusion or charitable gifts. Political gifts are also non-taxable. If a person pays for someone’s tuition as a gift that is also non-taxable.
A married couple that wants to split gifts that they give would be able to give twice as much as a single person and still remain tax free up to the limit. Any tax return with gifts must be filed just like regular tax returns. The deadline is always April 15, unless the person files an extension.
When a couple divorces there is no gain or loss on any transfer of property between the two individuals. There are times where the transfer between ex-spouse must be reported as a gift on a tax return. The federal rule will not apply to former spouses and gifts. Most gits will fall under the exceptions and no tax will be due. If this applies to you speak with your attorney to find out if you need to report the gift as taxable. You can find more information at https://giftsntoysland.com
Gifts that are not considered taxable to ex-spouses fall under certain categories. If the gift is made to support marital rights it is not taxable. If it qualifies as a marital deduction it is also not taxable. If the gift was made as part of the divorce decree it is also non-taxable.
Always check with your attorney or CPA if you are unsure about being subject to the gift tax. These rules can be complicated and gift tax limits change. If you are going through a divorce or are already divorced, consult your attorney for advice before gifting anyone with a significant sum of money.