On the Word on Wealth Radio show tonight (www.KPRZ.com and 1210AM San Diego, CA) The Retirement Professor (Marty Schneider) and I discussed the question –
If I got $10,000 for my college graduation. Do I have to tell the IRS?
The answer may surprise you: NO. Gifts under $14,000 per year do not get reported to the IRS or the state of California. They are not taxable. That’s right – not taxable.
Do these gifts need to be in cash? No. Gifts that are excluded from reporting and from tax can be any type of gift valued @ $14,000 or less. The gift can be a partial interest in a asset, like stocks, bonds, a timeshare, home, rental, partnership, or corporation.
Why give gifts: gifts reduce estate size of the giver and gives the asset growth to receiver of the gift. For example: Grampa gives $14,000 to grandson in the form of Roth IRA – a fantastic gift. The Roth will grow until the grandson’s retirement and could be worth a fortune by then.
Gary A. Quackenbush, California Attorney
NOTICE: Nothing in this article is legal advice and you may NOT rely on it for any legal positions or arguments. So, check it out first. I’d be happy to discuss your individual situation in a free initial consultation.