Legal Question in Tax Law in Illinois

Child Gift Tax

Our father-in-law has a substantial amount of cash in his savings account. He would like to give that money to our family and avoid taxes if possible. If he were to give the allowed (w/ no gift tax) $11,000 gift each to my husband and I would he also be allowed to give $11,000 to our 2 year old son (we are custodians on his savings account)? Also, would my son be subject to the ''kiddie tax''?

Thank you,

H.M.C.


Asked on 10/20/05, 5:24 pm

1 Answer from Attorneys
Cyndi Perez Trostin

Re: Child Gift Tax

Gift tax is a tax that is imposed on the "giver," not on the person receiving it.

Therefore, there is no tax upon receipt of the gift for you, your husband, or your son.

Interest that is generated on your son's investment (resulting from the gift) may be subject to the "kiddie" tax, depending on the amount of income generated from all of his investments.

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Answered on 10/20/05, 6:53 pm


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