Gift tax on donor and receiver
If a donor writes me a $900,000 check and I deposit it into my personal bank account, do neither of us need to pay taxes? Does only the donor need to file a Form 709 with the IRS because the amount is below the $13.99 million lifetime exemption, so it won’t trigger any tax for the donor? Also, since this money is not considered income for the recipient, does that mean the receiver doesn’t need to report or pay taxes on it? Additionally, for a gift of this nature, is it better to have written doc
Quick Answer:
No. Both the donor and recipient may have tax implications.
The donor may need to file a Form 709, Gift Tax Return, if the total gifts in a year exceed the annual gift tax exclusion (currently $17,000 per recipient in 2023). While the lifetime exemption is high, exceeding the annual exclusion triggers reporting requirements. The $900,000 gift likely exceeds this.
The recipient does not recognize the gift as income, but this is a gift tax issue, not an income tax issue for the recipient.
Written documentation of the gift is crucial for both parties to substantiate the transaction for audit purposes. This should include a record of the check and deposit. I recommend consulting with a tax advisor for personalized guidance.
Note: This answer is provided for convenience only. It is important that you speak to a CPA about your individual tax situation.
