Gift or Income and Amend

Forum|Forum|2 years ago
May 24, 2023
3 replies
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I had a small amount of Unemployment and no W2's. But put the Renters credit on but the Dept. of Treasury sent me a questionaire to return about extra income I assume because that did not cover the cost of rent. I did receive checks from a friend during the year to help out. I don't really care about the rent credit, but I want to make sure I am covered with the checks. I see it could be considered a gift, but it's over the 16k year limit and I also have no idea how he handles that on his end, though it comes from a business account of his. Should I send the letter back with the checks claimed as gift and would I owe any tax on the remainder, or file an amend and claim as income to avoid any issues in the future?

Ask the Experts - W-4 - May 2023

awatkins2

Thank you for this question, Gift income is not taxable to the person receiving the money (unless it coming from your employer). As for the renter's certificate you may want to just write a statement letting them know a friend helps you with your rent.

mypromqueenAuthor

Thank you, do they require proof that is in fact a gift or know exactly who it came from? I would have no idea if he filled out a 709 or writes things off as business expense, just want to make sure I can't get caught up in how he handles his write offs

jacquieb

Hi @mypromqueen

The person receiving a gift typically does not have to pay gift tax, regardless if over $16,000. The giver, however, will generally file a gift tax return when the gift exceeds the annual gift tax exclusion amount. The giver may also not owe gift tax due to the basic exclusion amount.

Hope this helps! 🙂

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DEBORAHANGEL

WHICH FORM DO I USE FOR A GIFT I GAVE TO MY GRANDDAUGHTER OF $50,000 TOWARD THE PURCHASE OF PROPERTY?

VolvoGirl

Employee

You don’t report gifts given or received on your tax return. She doesn’t report it either. But since you gave more than the annual limit of 18,000 you need to file a Gift Tax return form 709. There won’t be any tax due on it. Turbo Tax doesn’t have form 709. Or are you married or is she married? Then you can give more.

Form 709 Gift Tax Return

https://www.irs.gov/pub/irs-pdf/f709.pdf

Form 709 Gift Tax Return Instructions

https://www.irs.gov/pub/irs-pdf/i709.pdf

quorumof1

Hi There:

You have a very complicated situation, especially since it involves a friend. Would your friend be willing to sign a statement saying he gifted you? If so it might help. On the other hand a substance over form argument indicates that periodic checks from a business could be construed as wages or contract labor.

mypromqueenAuthor

I'll have to see if he can do that. If not, I understand how that can appear to be the case. If so, would it be best to do an amend to claim it as income then even though he doesn't W2 anything?