We do our own taxes… so did not find the form unduly complex. YMMV. But if the gift makes sense, avoiding the form is a bad reason not to do the gift IMHO.
I question some of your mom’s logic (once your brother deposits his check in the presumably joint checking account what’s to stop his wife from spending it?) but it’s her money.
Before she liquidates this account though, ask her to make sure she’s got enough “cash on hand” to cover emergencies, her 2022 tax bill, etc. With the market so volatile, it would be a shame for her to close out a money market account (aka “ready cash”) and have to take a loss liquidating something else if she needs a few thousand dollars.
Sorry, I had to report it on my taxes because I gave the gift limit in December, forgetting that there were birthday gift checks given throughout the year, so I was actually over the limit.
This info was given on my annual tax preparer packet. Sounds like I should be glad I’m not the one filling the form!
Please folks…tell me where this gift number goes on your IRS tax return. Please. I just looked over my 2021 return (we were over the limit and did have to complete and send in that form). I do not see where it would be on my tax return.
Maybe I’m missing seeing that one little line.
@blossom we also do our own tax returns which include some self employed income. The tax returns were a breeze. Some of our issue is, you need to list each gift amount given plus the date separately on that gift tax form. In addition, we wanted to split the amount to maximize the amount we gave. Our financial planner did it…but even he said…it was not so easy. He actually had to attach an addendum because there weren’t enough lines on the form for all of our contributions. So YMMV…indeed.
It was Form 709 the last time I used it. I found it a bit confusing, but I was filing my own taxes for the first time the same year that I filed 709. I mailed it in with my return.
I don’t know where the gift amount is mentioned on the Fed return.
I like your mother’s simplicity - money to children, not spouses, all at once. Yes, it takes a form to the IRS but to her she can see where her money is going in one place.
Once she gives the money, she has no control and any of the children or their spouses can blow through it all at once. That’s life.
Aaah. The forms I helped complete were simple- one recipient, a bank check to verify, each gift given in a different tax year, there was only one transaction to report for each form.
Down payment for a house (not mine!), nephew to start a business (not mine)… generous gifts but no questions around the timing, amount, recipient. Just a cashed check and I filled out the form…
I urge you to look into the “look back” period if there is any chance she would ever need Medicare assistance for nursing home care, assisted living, or in-home care.
There is no need (at least for federal purposes) to fill out any forms IF your mom does it by giving 16K to each recipient now, and again but up to 17K/recipient, in 2023. She wouldn’t need to report this. For 80K going to three sibs, she could gift a decent chunk that way now. And if there are spouses or children, she could gift to them, too, so that she can get it all done by Jan 2nd, 2023.
But she doesn’t want to. The mother wants to give $80k to each child now and not to the spouses (didn’t mention grandchildren).
Mother may not care about the paperwork that OP will have to do. As my mother got older, we just let her do it her way. She insisted on buying the 6 oz cans of ginger ale even though they were twice as much as the 12 oz cans. Explained it a million times that even is she didn’t drink the whole can it was still cheaper, but that’s what she wanted so we just got it for her. The OP’s mother’s way doesn’t even cost them extra money, just extra work for the OP/siblings.
That’s how I feel … let my mom do what she wants with her money as long as it’s not something crazy. Her world has gotten so small these past two years what with my dad passing and Covid that letting her disburse the money as she sees fits feels like a small win we can let her have.
Thanks, all, for the input. Met with the sibs tonight and we are mostly in agreement about how to proceed with probating my dad’s will, selling off his giant gun collection and meeting with mom Monday to talk about what to do with the money in savings, giving her the pros and cons of each option.
I also want to take this opportunity to say how proud I am of my parents. Sharecroppers without a HS education between them who managed to accrue enough assets that their kids even have to ask these kinds of questions.
Keep it simple. Let her give the $80k per offspring now. Have her accountant complete the gift tax return for her. Done.
The look-back period for Medicaid/long-term care is not an issue. If she doesn’t give you the money, she’ll have the money. Either way, it’s the same thing.
In all states but CA the look back period is 60 months (CA is 30 months). This is essentially means if during that time if your mother winds up in an assisted living arrangement and depletes her funds they will recoup the money she’s gifted up to 5 years prior.
If the money is not going to be spent or one can easily repay the amount gifted - no harm but if it is being used one needs to be aware that it might ask to be returned. With the cost of long term care even millions of dollars in savings can disappear in 5 years…
In my state they don’t “recoup” the money. The person just doesn’t qualify for Medicaid if there was money that was given away within five years. After the five year waiting period passes, then the person becomes eligible.
I misread it. But if she’s determined to avoid giving to spouses…and you don’t have college age kids whose tuition she could pay, then she can file a gift tax form. For me though it’s a sad waste of time though to avoid spouses.
and meeting with mom Monday to talk about what to do with the money in savings, giving her the pros and cons of each option.