What's worse Gift Tax or sales tax?

Question

I want avoid paying sales tax in my state on my new car so I'd like my mom to buy it in her state and gift it to me. Of course I'll give her the money and pay the monthly bill, but, can I be the cosigner on the lein? and will I or she have to pay gift tax on teh purchase price on federal tax return? This could save thousands which I'd prefer to give to my mom than to some state.

Answer 1

And how do you plan to register the car in your state?  You'll end up having to pay the sales tax when you register the car.

Answer 2

yeah, what you are planning is called tax evasion. not to be confused with tax planning.

If you get caught, you will have to pay the tax, a penalty, interest, and maybe a little jail time. NOT WORTH IT.

even if your tax rate is at 10% and the car you buy is $25,000

your tax is only $2500...it is a nice chunk of change,but it wont make or break you.

now if your tax rate is less and the car is lower in price...then it makes even less sense to put yourself in a pickle.

Answer 3

What you are proposing is called "tax evasion" and is illegal. Furthermore, you misunderstand what Gift Tax is. Gift Tax exists only to prevent people from giving away their money while alive in order to avoid Estate Tax after they're dead. Do a little research on irs.gov.