Is paying for roomates rent subject to gift tax?

Forum|Forum|7 years ago
October 18, 2018
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If I pay for a percentage of my roomate's rent (my roommate happens to be my fiancee) while she puts most of her paycheck toward student loans, is this subject to gift tax? I

For example, if I paid 100% of her rent for a year, the total would come out to $14400, plus I would pay for her health insurance and other living expenses.

Carl11_2

Employee

No. I seriously doubt you "gave" your room mate more than $15K for the entire year. But even if you did, in your situation I wouldn't worry about it....especially if you're getting married in the near future.

Understand that the term "Gift Tax Return" is a mis-nomer. There is no such thing as an actual "gift tax".

You see, when you die your beneficiaries can inherit up to $5.2M dollars from your estate and not a penny of it is reportable or taxable on your federal return. However, if you "gift" someone more than $15K in any one tax year, then the giver has to file IRS Form 709 - Gift Tax Return with the IRS to report the amount. Nobody will pay taxes on it. Not a penny. But that amount will be subtracted from the giver's $5.2M inheritance limit when they die.

In your case, if your room mate does not qualify as a dependent on any one else's tax return, they "MAY" qualify as your dependent on your return if you provided more than 50% of their support for the entire year. There's a lot of other conditions that would have to be met for you to claim them, and I seriously doubt those conditions are met. But overall I wouldn't bother with or worry about any Gift Tax Return.