My 90yo mom has a money market that she wants to spend down and give to me and two siblings. We would each stand to get about $80k. My understanding is that there are no tax implications, right? She would have to fill out a form, and this would count toward lifetime giving. We will never approach that $11.7 million threshold.
Is that correct?
I would check with a financial advisor.
I am not a CPA but you seem to be right. Your Mom will just need to file a gift tax return.
Agree with both— that sounds right but check with a financial advisor. She can also gift each of you $16K now and another $16K in January. She’s can also gift the same amount to your spouses, if thats appropriate (if it all goes in the same financial pot).
There is an annual gifting limit of $16K per person per calendar year without triggering IRS scrutiny.
When I was considering helping my offspring out with down payments, my FA suggested individual checks to kids and spouses in December and then again in January. So checks for $16K to DS, and $16K to DIL each month, totaling $64K.
That is reported on my taxes and goes toward lifetime gifting.
LOL @mominva - we think alike!!
Well, the smaller gifts per year to child plus spouse is EXACTLY what I suggested, but she doesn’t want to do that. I think I can get my sibs on board and we can get her to agree to do it but wanted to cover my bases if not.
Why doesn’t she want to gift the smaller amount to us and our spouses? She doesn’t like my brother’s wife and thinks that if she gives her a $16k check “she’ll just blow it,” which is ridiculous, but it’s what I’m dealing with here. She has no problem writing a check to my dh. 
I’m not a CPA but 2 things to consider. If you have college age kids would it impact FA? Also, could it be clawed back if she goes into assisted living?
Not a CPA as well but writing checks to other family members might not protect gift in case of divorce in community property states like California and others.
yes, you are correct.
But as teh others have noted, your mom could avoid filing the paper (Gift Tax) form by gifting each of your $16k now and the balance in Jan.
I don’t think this is reported on taxes. @BelknapPoint
Adding…we were required to fill out the “gift tax form” last year. We are both well educated and read and follow directions well. BUT, we found this form to be a doozie to complete. Some of it was that we had done multiple gifts, and wanted to split between us parents for the max benefit.
We finally gave up…luckily our financial planner was willing to complete these forms (we had to do two…one for me and one for DH).
I would try to make this process as simple as possible for your mother. One gift annually under the amount is easiest.
I thought the point of gifting at or below the limit was that there was no paperwork required. It was my understanding that it does not add up in your lifetime giving amount and does not need to be reported on your taxes. I thought that was the purpose of staying below the limit.
Is that incorrect? Otherwise, at what point do we not have to report it on our taxes when we give a gift to our children? 10K? 1K? $100 birthday present?
I did the gift tax form myself last year. I am a math person but had to get the help of D (a real math person) to calculate it. The directions were hard to follow. Before that we had the accountant do it for several hundred dollars for one page! Giving each person the limit $16,000 makes the most sense but since your mom does not feel comfortable with that just have the accountant do it during tax season. I seem to remember the due dates for the form were a little earlier than April 15.
I’m assuming that you’re talking about Medicaid paid assisted living? There are definitely rules as far as how many years ahead of time one must give away large amounts of money before being eligible for Medicaid. But if she’s giving away this kind of cash, sounds like she’s a long way from government paid living assistance anyways.
The common misconception is that you can only give $16k gift to any one individual in a given year. This is not true.
You have to report any amount over the limit so that the IRS can keep track, but gifts are not taxed until you have given 11.7 million in your lifetime It may be $12060 now:
Under current law, the estate and gift tax exemption is $11.7 million per person . You can gift up to the exemption amount during life or at death, or some combination thereof, tax-free. The exemption amount gets adjusted each year, and if no change in the law is made, it will increase to approximately $12,060,000 in 2022.
This is correct.
Yes…but I don’t believe this is included in your tax return. The gift form is sent separately…
I very much could be wrong on this…but we did this form last year. It was NOT mailed with our tax return, and IIRC, it specifically said NOT to mail with the tax return.
Hmmm. I didn’t realize the form would be so unwieldy.
I’m at my mom’s now and have called a family meeting with the sibs for tonight. I am hoping we can get some agreement before we all talk about it with my mom. I’m the only one who lives out of town, and I’m also the one in my family who gets things done, which is why my mom tells me what she wants and expects me to make it happen. Which I’m happy to do! Also on the agenda: Get my brother who is executor of my dad’s will, to start probate. My dad died more than 2.5 years ago.
Well…that was my opinion of it!!