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Must we declare a gift from my parents?

by Dick Nadler, CPA 

Must my wife and I declare a gift from my parents that is for the down payment on a house? The gift is more than $20,000.

Good news! The receipt of a gift, regardless of the amount, does not have to be declared on your personal income tax return.

But your parents will have to file a gift tax return for their gift to you. Each year a donor may give $11,000 to each donee without paying a gift tax. Exceeding the $11,000 per person donation results in the givers paying a gift tax or, at minimum, they will use up a portion of their lifetime gift or estate exemption. Currently that exemption is $1 million dollars for both gifts and estates.

Unless the gift exceeds $44,000, no exemption has to be used or taxes have to be paid. Let's assume that your mother gave you $11,000 and your wife $11,000, and your father did the same. Thus, they will not have to pay taxes on the gifts.

Even if one spouse gives all the funds from his or her separate funds, the non-donor can agree on the gift tax return that he or she has joined in the gift.

Dick Nadler, CPA, is principal of Nadler Accountancy Corp., Orangevale, Calif., and a member of the California Society of CPAs, Sacramento chapter. He can be reached at dick@nadlercpa.com.

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