Gift Tax Reporting Is Broken

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Each year, many people are required to file gift tax returns - but they don't. Estate and gift tax law requires that when you make a taxable gift, you must file a gift tax return. Some comply and some don't.
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This post is for informational purposes only and does not provide legal advice. Please do not act or refrain from acting based on anything you read on this site. Using this site or communicating with Rabalais Estate Planning, LLC, through this site does not form an attorney/client relationship.
Paul Rabalais
Estate Planning Attorney

[@soniayoung3544]

Paul, thank you for getting right to the topic. It’s not helpful/ interesting when hosts say hello to subscribers and chat with them. We don’t really care where they’re from etc. You keep your videos informative and right to the point! Just allows me more time to view your other videos. Very very helpful. Thank you

[@VomBethel]

We got around this by each parent giving each child and their spouses $15K each every year for 3 years. This helped each couple accumulate down payments ($180k) for house purchases. Of course we had to write letters to the mortgage companies indicating these were gifts with no expectation of repayments.

[@KS-cl8br]

Nice. That could be a 50% downpayment.

[@luckspell]

What if you're getting robbed and the police say it's a gift

[@dando4230]

If noncompliant Nancy's remaining estate + unreported gifts doesn't exceed the lifetime exemption then no tax would be paid whether she reported the gifts or not, so the lack of a real penalty seems ok to me. On the other hand, if noncompliant Nancy's remaining estate + unreported gifts DOES exceed the lifetime exemption and her estate executor doesn't report the previous gifts, thus underpaying estate taxes when she dies, wouldn't this deliberate underpayment be a criminal offense by the executor? And if the executor claims amnesia, wouldn't there be penalties regarding the underpayment of estate taxes if the unreported gifts are discovered by the IRS?

[@treygarver7791]

You would have to prove the executor new about the gift to criminally chare them. At least I think that would.

[@patmcgillivray1926]

You are so interesting to listen to, even though I'm Canadian and most of the information doesnt really apply to us...but... thank you anyway 😊

[@kristichu8395]

Paul, I really like your video. They are very informative and helpful. Thanks so much for making those!

[@boilednuts]

Great info! So, does the financial institution reporting deposits and withdrawals of $10k or more become a concern here? I've heard that it's just a money laundering deterrent.

[@ThomasMarcotte-jt9od]

Paul, excellent info as always. Thanks.

[@ginaamoroso1882]

What happens if they go over the 15 million and still don’t report gifts

[@silent1sean]

Thank you Paul for passing along all the informative information. I have appreciated each one of your segments and have learned so much. I am hoping you might be able to provide some insight on the benefit or downfalls of adding each one of our children as one percent owners on our property deeds. My wife and I would remain at 98% owners. We live in North Carolina. Thank you for any information you can provide. Kindest Regards

[@silent1sean]

@Rabalais Estate planning, LLC Paul, I think you meant to send that answer to someone else. It certainly does not pertain to my question.

[@brucebrown4087]

Me like others question how the non complaint recipient explains the money passing through the accounts if audited on their taxes

[@michaelgaines6166]

Have you recorded a video about charitable giving - reminding cliets that they can make a difference in the lives of their family, but also organizations they believe in, their community?

[@vidyarao7930]

Why should one person file gift tax when they have lawfully filed tax every year what is the point in filling 709form it's rediculas moreover it's double taxation which is wrong.. it's individual's liberty to gift anything after duly filing and paid taxes every year. This is unnecessary rule. Which needs to be scrapped

[@vidyarao7930]

Thank you for the information

[@BobLobsiger]

so where does paying to college fall? if a child goes to a expensive school and parents pay for that college...is that considered a gift?

[@jeffa847]

No If paid straight to the educational institution it is exempt (on other words an unlimited amount of money can be paid for someone's tuition without it being taxed or counted against your yearly gift exemption or your lifetime exemption). Likewise with medical expenses. Note that I said it has to be paid directly to the institution/provider - you can't write a check to the family member and then have them pay it out of their account. Can't believe he didn't cover that in 7.5 minutes.

[@treygarver7791]

@@jeffa847 I am sure collages lobbied to get the law structured this way.

[@katherts]

From the “Department of Making You Sad”.

[@drpill1230]

Still better than 50% capital gains tax

[@MusafirsSoul]

Is it possible to make a simple individual trust independent of the spouse in community states like Louisiana? This is to be funded with own funds.

[@lorindakrause3792]

How do you protect children in a blended family?

[@mlee1308]

Keep up the videos. Thank you

[@susanhage512]

How does this affect the recipient of gift??

[@slimdawgwoof]

Good to know! Thanks for sharing

[@americasestateplanninglawy1946]

Thanks for watching!

[@VashtiPerry]

Why does the irs want to know this information?

[@robobrain10000]

The gift tax system makes no sense in the US. It'd be simpler to just have a recipient file the tax rather than the donor under a different system. Tax it similar to some other income type or don't tax it at all.

[@Corkfish1]

I wouldn't be surprised if the vast majority of gifts go unreported. Enforcement is a very low priority for the IRS.

[@johnbauman4005]

Noncompliant Nancy didn't benefit by not filing, her heirs did, right? Thanks for all the great info you put out! Already subscribed!

[@robobrain10000]

She benefitted through her heirs. 😉

[@machellep1]

We transferred my stepdaughter a house out of our name ( because she insisted, long story ) and I purchased my grandson a 25 k car last year. Our lawyer , nor our accountant ever mentioned the need to file a gift tax. And I reported these to our accountant. We have given large sums, usually 5-10 k to different kids over the years, and have never been told to file gift tax . Interesting, I believe I’m paying our accountant too much money .

[@Corkfish1]

Yeah if he was aware of those transfers he should have made you aware of the necessary filings

[@JM-fi4mf]

In your example, does the son have to pay taxes on the $150K?

[@garyomalley6347]

The example used was $115,000. To your question, no tax is due by either the father or the son. However $100,000 should be reported on form 709 to eventually or ultimately reduce the amount of gifts over the lifetime of the father.

[@JM-fi4mf]

@@garyomalley6347 thanks