Do you need to claim gift money on your taxes?

Question

I received money from a CD that my grandmother took out on me when I was young, It is being used for college expenses. The money was sent me via check in an amount grater than $1500. She says I have to claim this money as income on my taxes. I say I do not as it is a gift, not income. So, do I need to claim it?

Answer 1

no, you dont claim anything.

they dont have to file a gift tax form for that small of an amount.

however, if they recieved interest on the deposit, they do have to report that interest as income. and pay tax on it. even if they gave all the inerest to you!

Answer 2

The interest (the money that the bank paid in excess of the amount that your grandmother deposited) is taxable.

Certain gifts from those for whom you do work (tips, bonuses, etc.) are taxable.

If you did no work in return for the gift from your grandmother, you do not claim it on your taxes.

Answer 3

Whether you owe tax depends on whether this account was in trust for you.  If it was set up so that you were the owner, you might owe some tax.  If it was in the name of someone else, you will not owe any tax or show this on your tax return.

If you were the owner of the CD, then you will receive a 1099-INT from the bank that issued the CD.  This form will show only the interest earned on the CD for 2008, not the entire amount of the CD.  

If you are required to file a tax return, you must include the amount of 2008 interest on your tax return.  

If you are a dependent, have no other income, and the amount of interest is less than $850, you are not required to file a tax return and will owe no tax.

Answer 4

No, you don't show a gift on your taxes.  She can't deduct it, and you don't have to claim it.

Answer 5

This may be more complicated than it first appeared.

If she opened the CD when you were young, but in her name, with the intent to give it to you, it's a gift.

If she opened the CD in both of your names, (essentially "giving" you the money before putting in the CD), you've owed taxes on it all the intervening years, not just now.  Your parent or guardian should have been informed.

If she opened an UGTM (Uniform Gifts to Minors) account, I think the taxes are in your name.  Your parent or guardian should have been informed.

If she bought a US Savings Bond in your name, then you do owe taxes on the interest when you cash it in, although there's a deduction for education.

If she opened a "529" education account in your name, then....

But, basically, if you or your legal guardian never had control of the money, YOU don't owe taxes on it.