Note: I tried asking this question in the tax and the personalfinance subreddits but I have got no responses at all so I am posting it here.
Background Knowledge
I am aware of the gift tax annual exclusion, and that any gift over $15,000 must be reported to the IRS by filing Form 709. I am also aware of the $11.7 million lifetime exemption. That means the person gifting me anything over $15,000 does not necessarily have to pay gift tax, but is still required to file Form 709.
Summary of Situation
My mom is going to gift me $50,000 so I can invest in. After I use that money with my current savings, I will pay it all back to her in a couple months as a gift. So, $35,000 of that money should be reported in Form 709, and the remaining $15,000 is not reported per the annual exclusion rule.
My questions are:
Questions
- How will the IRS know that the $15,000 of the $35,000 I received are part of the gift ? Will they consider the $15,000 I received as taxable income? I do not want to end up being taxed for it.
- When do I have to file Form 709? Right away or when I do my tax returns for 2021?
- HOW is the gift supposed to be gifted? Is there a way to make it clear that the $50,000 came from a gift so that the bank does not have to file a Currency Transaction Report or consider it income?
- Lastly, is it better to be transferred the money from her bank to mine, or is it okay for her to give me CASH that I deposit into my account? Which way is better? I am asking because she has a lot of cash laying around that she withdrew from her bank. Which way is safer/better? Being transferred the money from bank to bank or being given cash that I deposit?
This last question is important because my mom will most likely give me cash, and I am worried that might not work since there is no record that shows that the money came from her bank account.
Thank you for your help.
Submitted November 19, 2021 at 01:14PM by abc123abz https://ift.tt/3oIRA1h
