mother has sold her house and wants to give the monies equally to her two children. She is still living. Do the children have to pay taxes on the money given them.. Approx 82,000.00 to each child.
2 Answers from Attorneys
The children do not pay taxes, but depending on the size of the mother's estate, she may or may not have to pay gift taxes since the gift, if given in one year, is over $14,000. This should be discussed with a CPA or attorney.
While the children as gift recipients will not have to pay income of gift tax, mom should worry about her income tax. Mom will need to file a gift tax return, but unless she has made substantial gifts in the past, there should be no gift tax due. Mom may, however, have to pay an income tax on her sale of the house. Whether an income tax is due depends on a lot of factors which are not addressed in your question. Was it a principal residence? What was her tax basis? How long had she owned it? Was it held out for rental?
Please assure mom does not give all the proceeds away, then have a big income tax to pay. See an effective CPA or Attorney to explore the tax planning and tax consequences first.
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