I recieved a $9000 gift from a relative to pay for college in 2006. How do I report this on my tax forms?
Question:
Answer:
The gift is not taxable. Your donor-the person who gave you the gift-already paid tax on it.
If you kept it in an account, you would pay taxes on any interest the gift receives (interest income), or if you invested it in stocks, you would pay tax on any gain you received from sale of the stock to pay your tuition.
Otherwise, the $9000 is not reportable on your taxes because it is a gift.
Your donor only has to disclose it if the gift is more than $12,000.
I believe gifts have to exceed $10,000 to be taxed as income. So, don't report it.
A gift is never taxable to the recipient. If the amount of the gift exceeds the maximum amount and triggers gift tax, the gift tax is assessed on the person giving the gift, not the person receiving the gift.
And if the person giving the gift is not a US tax resident (not a US citizen or green card holder, lives outside the US and did not meet the substantial presence test) then it is the best of both worlds, because even if they gave you a gift that exceeds the nontaxable gift amount, no one would be paying gift tax. If you receive gifts from foreign person(s) that in total exceed $100,000 during the year, then the gift(s) MUST be disclosed on Form 3520. However, for purposes of Form 3520, gifts DOES NOT include any amount paid for qualified tuition or medical expenses.
if you cannot be claimed as a dependent of your parents, then you can use the amount from the 1098-T you received to get an education credit. even though the money came from a relative, youre considered to be the one paying for the education.
if youre using turbotax or another software it will ask you if you paid any qualified education expenses. the software will determine what education credit or tuition deduction youre eligible for. i suggest you enter this because youd be entitled to a bigger refund.
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