Gift Tax
When is a gift complete for a JTWROS account?
Under estate law, joint tenancy is a special type of ownership by two or more persons of the same property. The individuals, who are called joint tenants, share co-equal ownership of the property and have equal, undivided, rights to keep or dispose of the property. Joint tenancy also creates a Right of Survivorship. This right provides that if any of the joint tenants dies, the remainder of the property is transferred to the survivors.
Treas. Reg. § 25.2511-1(h)(5)) +((4)) explains that the transfer of money or property to another party (related to the taxpayer or not) constitutes a gift.
Because joint tenancy creates co-equal owners in the property, and there are exactly two of you, each of you essentially now own a 50% equity interest in the property. With an initial total cost (down payment) of $80,000, that means you each made an initial $40,000 as an equity investment.
However, you indicate that you contributed $20,000 of this $80,000 total amount, leaving some $20,000 that should be considered an effective "gift" to you on the part of your sibling, in order to equalize the investment at 50% / 50%.
That said, each taxpayer is allowed to give $14,000 per year (in 2016) to another person completely free of gift tax implications. Thus, $20,000 - $14,000 = $6,000 is the derived amount of the gift, to you, that becomes a reportable item on the part of your sibling.
Please keep in mind that this $6,000 is not actually a taxable sum in itself, as the $6,000 will simply count toward reducing you sibling's lifetime Unified Gift and Estate Tax allowance (which in 2016 is nearly $5.5 million). Nevertheless, there is still a reporting obligation, even in the absence of any taxes due, that legally should be met by filing Form 709.
What is the annual gift tax exclusion?
$15,000
What is gift splitting?
Gift splitting is a rule of taxation that allows married couples to split the value of agift between them to double their allowed gift tax exclusion amount.
What is the present interest requirement?
A gift of present interest is one that the recipient is free to use for her own enjoyment and benefit immediately—no strings attached. If the recipient doesn't have complete use and enjoyment of the gift until some future point in time, it's a future interest gift.
Common examples of a future interest gift are reserving a life estate in real estate and funding a trust. In either case, your beneficiary typically doesn't become the full and vested owner until your death.
Future interest gifts don't qualify for the unlimited marital deduction or for any other gift tax exclusions and exemptions either. If you've made a future interest gift to anyone, the entire gift is taxable and must be reported to the IRS on Form 709, the United States Gift (and Generation-Skipping Transfer) tax return.
What is a crummey withdrawal right?
Crummey powers give the beneficiary a limited time (often 30 or 60 days) to withdraw contributions to a trust, converting the future interest gift to a present interest gift. This withdrawal right is generally limited to an amount equal to the current annual gift tax exclusion.
What are the gift tax rules for gifts to a spouse?
Gifts between spouses are unlimited and generally don't trigger a gift tax return.
What are the gift tax limitations for gifts to a non-U.S. citizen spouse?
The gift tax annual exclusion to a non-citizen spouse has been increased to $155,000.
Does the payment of tuition and/or medical expenses counts towards my gift tax annual exclusion
amount?
If given directly to the institution it’s not counted towards gift tax annual exclusion.
What are the potential tax consequences of gifting more than the annual exclusion amount?
It may reduce your lifetime exclusion amount (currently 11.4 million for 2019). Must file a form 709 to report.
Who is responsible for paying the gift tax?
Typically the donor. Form 709 instructions Page 2 left bottom, Transferee liability.
What is the gift tax applicable exclusion amount?
Does adding a non-spouse to an investment account create an immediate gift?
What is the basis of assets received as gift?
Your basis for figuring a gain is the same as the donor's adjusted basis, plus or minus any required adjustments to basis while you held the property. Your basis for figuring a loss is the FMV of the property when you received the gift, plus or minus any required adjustments to basis while you held the property.
What is the date of transfer, for gift tax purposes, when stock is being transferred?
What is the due date for the gift tax return?
The gift tax return is due on April 15th following the year in which the gift is made.
Do I need to report inheritances I receive to the IRS?
You won't have to report your inheritance on your state or federal income tax return because an inheritance is not considered taxable income.
How do you value American Eagle gold coins for gift tax purposes?