No one imagines there will ever be a fight about money, but it happens all the time. I've searched online regarding this issue, but I've seen people saying about all sorts of things from "no problem", "gotta pay gift tax", to "that's illegal". How Much Do I Need to Save for Retirement? Ask for small amounts of money at a time and save up slowly. Also, can I just open a saving account and pay this large amount in? Instead it counts against a lifetime exemption of about $5.5 million (about $11 million for your parents...again because it's per giver). I'm Sorry for asking a duplicate question. I don't believe that it could be this simple so does anyone have any advice? However, the annual lifetime gift tax exclusions the Trump tax plan established are set to expire in 2025 unless further political action makes them permanent. I know it's obviously more than the $13,000 gift allowance per year. In other cases, parents might give … April 22, 2016 at 6:24 am At least you tried for your child; my parents didn’t do diddlysquat. However, they should explore different estate planning strategies to avoid gift and estate taxes or minimize the hit. I mean, nominally you're "cutting out the bank," but by cutting out the bank, that means one party here gains and one loses. If your parent dies within that five year period, however, the IRS considers the remaining portions a part of the parent’s federal gross estate for tax purposes. Yep. Any gifts in excess of that amount are taxable gifts. The amount of the exclusion in 2014 is $14,000. The only way to make it an inheritance is to die, so I would suggest that you make it a gift. However, he has to file a gift tax return and fill out IRS Form 709. These include careful estate planning strategies, utilizing the right trust and taking advantage of the exclusions for giving money to students. My parents only give me $40 a week that isn't enough I need $60. You can avoid gift taxes when making gifts toward the following: When paying for someone’s tuition or medical bills, it’s best to forward those payments directly to the institution to avoid any hassles with the IRS. This is the total amount you can give away tax-free over the course of your entire life, and it’s $11.58 million as of the 2020 tax year. If one gift to the same person in one year exceeds $13,000 then a gift tax return must be filed. If they forward it to you first, they’d likely have to fill out some extra paperwork. She has to file IRS Form 709 to file the gift, because she used up her $15,000 annual exclusion for the year. Also, the $14K exclusion applies to each of the parents individually. But if they do owe some gift tax, they may owe up to 40%. For more information, get the IRS Publication 950, "Introduction to Estate and Gift Taxes," IRS Form 709 or 709-A, "United States Gift Tax Return," and Since you are going to be paying them back it really is a loan. I know this kind of issue was mentioned many times in this subreddit, but even after reading a number of them I'm still not sure how I can reflect those cases to mine. Photo credit: ©iStock.com/Kerkez, ©iStock.com/nzyme, ©iStock.com/artisteer. If you want to go above and beyond, you could even write them a thank-you note. But because it was made toward a 529 plan, the IRS can treat it as $15,000 made throughout the course of five years. Not illegal. Depending on the amount, your parents may need to file a gift tax return. If you give them $500 per month, then it would be considered as a gift from you to your parents. 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