Q&A: This generous gift has no tax effects

Dear Liz: If I give $15,000 to my grandson, do I report it on my tax return? Is it deductible? Does my grandson report the gift on his tax return and does he owe tax on it? What if three sets of grandparents (parents and stepparents of his parents) do the same?

Answer: No, no, no, no and it doesn’t matter for tax purposes (although obviously your grandson should be delighted he has such generous grandparents).

Gifts to individuals aren’t tax deductible, but neither are they taxable to the recipient.

People can give a certain amount each year to as many recipients as they like without having to report the gifts via a gift tax return. In 2019 and 2020, the limit is $15,000. Each grandparent could give up to that amount to your grandson; he wouldn’t have to report the income on his tax returns, and it wouldn’t cause any of you to have to file gift tax returns.

There’s no limit to the number of people who can give $15,000 to your grandson this way.

You wouldn’t owe gift taxes until the amount you’d given away above the annual exemption limit exceeded $11.4 million.

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