Tax question - cash received

[Heavenly]

I figure who better to ask than beer lovers. My Dad is getting really old and wants to start giving his "excess cash" to his kids now before he dies. I've read some things online about a $5 million dollar exception or tax free distribution. It's not that much, but it is more than the annual gift exclusion.

My main question is what is this annual cash distribution called by the government? At least then I know how to research. Hoping these are tax free to me. The more I save on taxes the more I spend on beer.

 

[myndflyte]

I'd consider this a gift, so look at the tax regulations around that. I think up to a pretty good amount is tax free.

 

[Heavenly]

I'd consider this a gift, so look at the tax regulations around that. I think up to a pretty good amount is tax free.

I like the way you think. So far so good! Conical fermenter here I come.

 

[Steveruch]

Perhaps annuities that provide a yearly stipend that is under the non taxed gift amount?

 

[mkelly601]

I think it is somewhere around $10,000-12,000 that is considered the gift amount that is tax free. You are talking about inheritance, which I think your father can go ahead and give out up to a certain amount(1-2 million?) without being taxed. It will count towards the amount you can receive tax free after his death though. I am not a CPA so if it is more than the annual gift amount, I would pay the money to talk with a financial planner just to be safe. You do not want Uncle Sam knocking on your door.

 

[Dcpcooks]

I’d definitely talk with an accountant. I believe the annual amount is 10k. There are ways around that however by creating a trust or based on his age you may have a few other options.

The short answer is talk to a pro before you move money to minimize tax liability.

 

[triethylborane]

Get advice from an attorney and/or a CPA.

 

[MaxStout]

Federal estate and gift taxes have an exemption up to around 5.5 mil, IIRC. But state estate tax rates vary widely. Don't rely on what other people say, there's too much at stake to chance it and too many traps. Consult a qualified tax advisor or attorney.

 

[bob1852]

https://www.irs.gov/businesses/smal...oyed/frequently-asked-questions-on-gift-taxes

 

[ancientmariner52]

Contact a CPA who specializes in taxes. Trying to figure out IRS rules is like trying to untangle a plate of spaghetti by mind power.

 

[Heavenly]

I'll search for a tax specialist. Thanks.

 

[chrishanson]

The gift tax limitations for reporting is $14,000 per gift recipient (this changes occasionally and with the current bill in congress, I wouldn't be surprised if it goes away). Your father can give you $14k a year with no filing requirements and no effect on exclusionary amount of his estate (currently $5.5 Million).

If you're married he can give you $14k and your spouse $14k, if he's married both he and his spouse can each give gifts. This means essentially he and his spouse can give you and yours $56k a year without a tax filing or any tax implications for you.

 

[Horseflesh]

It's only amounts above that yearly freebie amount that factor in to the lifetime cap. You can give a lot away without paying taxes.