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

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Dave Du Val, EA

Dave Du Val, EA
Chief Compliance Officer for TRI Holdco

Dave Du Val, EA, is Chief Compliance Officer for TRI Holdco. Inc., the parent company of TaxAudit, and Centenal Tax Group. A nationally recognized speaker and educator, Dave is well known for his high energy and dynamic presentation style. He is a frequent and popular guest speaker for the California Society of Tax Consultants, the California Society of Enrolled Agents and the National Association of Tax Professionals. Dave frequently contributes tax tips and information to news publications, including US News and World Report, USA Today, and CPA Practice Advisor. Dave is an Enrolled Agent who has prepared thousands of returns during his career and has trained and mentored hundreds of tax professionals. He is a member of the National Association of Tax Professionals, the National Association of Enrolled Agents and the California Society of Enrolled Agents. Dave also holds a Master of Arts in Education and has been educating people since 1972.

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