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I'm new to paying taxes and have a question about gift money. I know gifts are not taxed for the recipient, but if one takes a gift and deposits it in a savings account for more than one tax year, will it ever be considered taxable income, or will only it's annual interest (if high enough) be so treated?
To find your answer you can, 1. call the IRS. The number is in the phone book or find it on line. 2. Call a CPA. I don't believe they would charge a fee to answer a question. 3. Call the tax dept of your state. 4. Go to IRS.GOV and hunt around their web site for your answer.
I am can only answer for here in Canada. Gifts are not taxable, however, if this is a large sum of money, you should retain some documentation to prove that it was a gift and not earned income. As long as you can prove it was a gift, you should be fine. Perhaps the best thing for you to do is to contact your tax office. The number should be in your phone book, on tax forms, or easily found over the internet.
Are cash gifts less than $10,000 taxable?
Clint from Baltimore, MD
The annual exclusion is 11000 for this year, but you can find out more information below because it really depends on who it goes to and so on.....
PDF file from the IRS
It is allowable by law to give cash gifts of $11,000 per person without your paying taxes