Question

How can we give this gift to our daughter properly?

Forum|Forum|3 years ago
October 24, 2022
1 reply
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My husband and I want to buy a used car for my daughter for her new job. This car costs$ 20,000. I know gift limit for 2022 is $16000/person. So my husband and I together can give up to $32000 without fill any form when we file the tax.

The checking account which we will use to pay the car is a joint checking account between my husband and I.

By writing out this check to buy the car, I will use up my gift limit while part of my husband's gift limit.

Do we need to write a gift letter to my daughter and keep record or it does not matter because it is under gift limit for 2 persons( my husband and I).

And I know we no need to fill any form when we file married jointly tax return in 2022, am I correct?

rjs

Employee

If you write a check to the dealer to buy the car, the check is not the gift. You are giving the check to the dealer, not to your daughter. So it doesn't matter what kind of account the check comes from, who writes it, or how much it's for.

The actual gift is the car. You and your husband can't each give her half the car. There's only one car, and it's worth $20,000. Your income tax return is not the issue. Gifts don't go on your income tax return. To stay under the $16,000 annual exclusion you would have to file a gift tax return, Form 709, to split the gift. This is completely separate from your income tax return. You would not have to pay any gift tax unless you have previously made gifts totaling more than $12 million over your lifetime, but you have to file the return. You cannot file a gift tax return with TurboTax.

A "gift letter" would not accomplish anything. The only way to split a gift is to file a gift tax return.

If you want to avoid filing a gift tax return, you and your husband could each give your daughter $10,000, in two separate checks, one from each of you, and let her buy the car. Then you are each making a gift of less than $16,000. It doesn't matter if the two checks come from the same joint account, as long as each of you writes and signs a separate check. The checks have to be payable to your daughter, not to the car dealer.

M

Mike9241

I hope your daughter is a responsible person. Once you gift her the money it's hers. she has the right to do with it as she pleases. buy the vehicle or spend on jewelery or a trip around the world.