There are many reasons to worry about taxes. For example, you are most likely wondering How much money can I receive as a gift without paying taxes? If you think that by receiving a gift in money you are going to lose a part of it to be able to comply with the payment of taxes, you can rest easy. The I.R.S. does not consider gifts as income, even if the gift is money. Therefore, you will not have to include the monetary gift on your return, nor pay income taxes on it.
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How much money can I receive as a gift without paying taxes?
As the recipient of a cash gift, you can receive any amount of money and you will not have to declare or pay taxes for it. But there are tax-exempt limits for cash gift givers, after which the federal gift tax kicks in.
These limits are called exclusions and when they are exceeded the donor may have some liability towards the Treasury. The good news is that the maximum exclusions for gifts are quite large. So if someone gives you a monetary gift, they can be quite generous without incurring a tax penalty.
Specific, You can receive up to $15,000 in gifts without having to pay taxes to the IRS.
Limits of exclusions
For the 2017 tax year, individual contributors could donate up to $14,000 to each person within a year, without having to pay taxes on the donation. This amount rises to $15,000 for fiscal year 2020.
In the case of spouses, each of them can give up to $15,000 to the same person without having to pay taxes on their gifts. There’s no limit to the number of people you can give tax-free gifts to each year, so if you’re donating money to family members or friends, you don’t have to choose recipients based on any tax considerations. .
During the lifetime of an individual taxpayer, the IRS set a tax-free limit of $5.49 million in monetary donations in 2017, this amount was increased to $11,180,000 as of 2018. The tax-free gift allowance is separate from the annual exclusion; for example, only amounts above the annual limit ($15,000) that are given to a person begin to accumulate toward the lifetime limit. When you die, your estate is taxed on the total accumulated sum that exceeds this limit.
Some monetary donations are exempt from the exclusion limits, which means you can receive an unlimited amount of money tax-free from the donor. The instructions for the form 709 The IRS, “United States Gift (and Generation Transfer) Tax Return,” lists these allowable gifts and the conditions that are placed on them. For example, someone could pay your eligible medical bills without paying gift tax if they make payments directly to your medical provider. It can also pay for your education if the payment is made to an educational organization that meets certain requirements.
IMPORTANT: Although money is a taxable gift, it is the giver of the gift who is subject to the obligation to declare or pay and not the recipient.
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Exceptions for spouses and charity
If you are a US citizen, your spouse can give you an unlimited amount of money as a gift tax-free. If you’re not a US citizen, in 2017 your spouse could give you up to $149,000 tax-free. From this amount you must subtract the $14,000 annual exclusion ($135,000 left) that qualifies for the marital gift tax deduction. In 2018, the amount rises to $152,000. These requirements are listed on the 709 form.
If you receive donations of money to your IRS-qualified charity, keep in mind that this money is subject to IRS exclusion limits because the money is being given to you. But if you ask your supporters to give the money directly to your charity, instead of giving it to you, they can include the gifts as deductions on their tax returns.
Changes in the gift tax legislation in 2018
Starting in 2018, you can give someone $15,000 in gifts annually without counting toward your lifetime limit or incurring taxes. Starting this year, the lifetime estate and gift tax exclusion is $11,180,000, and you can give a total of $152,000 in qualifying gifts to a non-US spouse.
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Gift Taxes in 2017
The annual gift exclusion for 2017 was $14,000 per person, and the lifetime estate and gift tax exclusion is $5.49 million for gifts made before 2017 and for people who died that year.
You can give a total of $148,000 in qualifying, tax-free gifts to a non-US spouse in 2017.