Are gifts deductible?

March 26, 2014 by Dave Du Val, EA
Yellow house with white fence

Hey Dave,

I gave my daughter $10,000.00 for a down payment on her house. It was earmarked in our trust to be paid to her on our death. I inherited the money from her mother, who passed away earlier this year. Is it deductible?

Sincerely,

Travis

 

Hi Travis,

Please accept my condolences for your family’s loss.

As to your question, when you give a gift, it is not deductible to you, nor is it taxable to the person to whom you give it. However, you are only allowed to gift a specific amount to each individual person each year. Gifts exceeding this specified amount will require the filing of a gift tax return and use up a portion of your lifetime gift tax exclusion. For 2013, the limit was $14,000 per giftee, so this gift does not need to be reported, nor is it deductible.

Deductibly Yours,

Dave Du Val

Tags: gift tax

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Rhonda was a Seasonal Tax Return Reviewer at TaxAudit before joining the permanent staff as an Audit Representative in 2009. She has a Bachelor of Science in Computer Science and worked in the Information Technology field for 15 years before making a career change. Since transitioning to the field of income tax in 2003, she has prepared and analyzed hundreds of tax returns. Rhonda enjoys helping taxpayers and tax professionals learn and understand the fascinating world of income taxes. Currently, she is the Learning and Development Manager.


 

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