My 93 year old father passed away in January of 2014. He was the primary and I the secondary on a CD that I divided 4 ways in February of 2014. Because I was secondary on the account, not a benificary or POD, does that
make the money mine to give and should I be paying a tax of completing a form for it on my 2014 return, The amount given to each person was around 30, 000.00. He had no will, owned nothing else. I appreciate all of your knowledge, and am thankful you are willing to share it.
Terry Says: Well, first let me say it was generous to you to share the money, even though you inherited all of it as the secondary owner of the CD. You do not owe any gift tax unless you exceed the lifetime maximum amount, currently a $5.34 million exemption. In addition, you are allowed to gift up to $14,000 per person to any number of persons each year, without the amount counting against your lifetime exemption. So, in retrospect, it would have been wiser to give each person $14,000 in one year, and then a like amount in the next year. The amount you gave in excess of the annual allowance, will count against your lifetime $5+ million exemption.
Since you gave more than the $14,000 to several people, you have to file a gift tax return. Here are the rules for filing this return:
If you make a taxable gift (one in excess of the annual exclusion), you must file Form 709: U.S. Gift (and Generation-Skipping Transfer) Tax Return. The return is required even if you don’t actually owe any gift tax because of the $5.34 million lifetime exemption. The return is due by April 15 of the year after you make the gift—the same deadline as Form 1040. If you extend your 1040 to October 15, the extended due date applies to your gift tax return too.
The one exception would be if you gave some of this money to your spouse. You can give an unlimited amount to a spouse without triggering a gift tax.
Consult with your tax preparer about filing this Form 709.