By Eric Stock
BLOOMINGTON – If you get a financial gift from someone, do you have to give a gift to Uncle Sam?
A local tax preparer said he’s been getting that question quite a bit this tax season.
Rick Johnson President of Tax and Accounting Plus in Bloomington said the only one who could be subject to the tax is the one who gives the gift.
“The people that receiving the money have this understanding they are going to have to pay taxes on it, but that’s not the case,” Johnson said.
According to the tax code, any gift such as a donation to a school, charity or family member of less than $14,000 is exempt from the tax. That total doubles for a couple.
Likewise, you can’t deduct the value of gifts you make unless it’s a charitable contribution.
Johnson said it’s becoming a bigger issue as more people are passing on their inheritance to their children while they are still alive.
“More elderly people are at the point instead of waiting until they pass and pass money on to their children, they are going ahead and giving money to their children and grandchildren now so they can see them enjoy it,” Johnson said.
More tax tips are available under the Features tab, https://www.wjbc.com/category/tax-tips-2/.
Eric Stock can be reached at eric.stock@cumulus.com.
