Do you have to pay taxes on money you give someone?

Answer 1

Yes this is possible.

For tax year 2009 or 2010 one family member can gift to any other number of family members up to $13,000 each without any reporting by either party each year.

The person who receives your gift does not have to report the gift to the IRS or pay gift or income tax on its value.

If you give any one person gifts in 2009 or 2010 that were valued at more than $13,000, you must report the total gifts to the Internal Revenue Service and may have to pay tax on the gifts each year.

For more information go to the IRS gov web site and use the search box for publication 950, Introduction to Estate and Gift Taxes, IRS Form 709 United States Gift Tax Return, and Instruction for Form 709.

The instructions are available at the IRS gov web site choose within Forms and Publications

However, what you call a gift and what the IRS defines as one may be different. And many things the world calls a gift are very much taxable indeed.

For example, remember when Oprah gave everyone in the audience a gift of a car? And then the INCOME TAX on the value of that gift was indeed due by the one getting it? (As is tax on winning any game show or lottery, etc)

The same is true in most all situations (outside of family) - call it what you want that doesn't change it (bonus, gift, holiday extra, performance, good looks, etc- whatever - it's income) - if you are given ANYTHING of value the value you have been given is taxable. PERIOD