Tax Question!!!!!

Discussion in 'Taxes and Accounting' started by zook, Nov 18, 2007.

  1. zook

    zook

    In February my parents gave me $25,000 of their savings account to play with.
    I put the money in my bank account, then I transfered it into my own individual trading account at TDAmeritrade.
    Profit: I've made 6k. Current account at $31+
    (((((I am currently listed as a dependent under them.)))))) Not sure if this matters?
    Money from a savings account.
    Age 60-61 (23 Me).
    Family income 60k.


    Are we going to get hit with gift tax?
    Should I return the money before Dec 31?
    Could we just call it an interest free loan, so that there was no gift involved?
    What other taxes, might we have to worry about? How should we do this next year, Jan 1st.
     
  2. They're going to give you the profits ? Why ?

    If you're still listed as a dependent I'm assuming your young. Why not just give them the money as a gift for everything they've done for you ? I'm sure its worth more than $6,000.
     
  3. nkhoi

    nkhoi Moderator

    you need you specify both of their age, what kind of retirment account, their income bracket, your income bracket. Tax is not a fuzzy matter.
     
  4. Capital gains tax.

    Was the money withdrawn from an IRA account early? There might be a 10 % penalty for early withdrawal.

    Even if you give the money back to your parents the capital gains are still yours and taxable to you. Not a big problem unless you have other income. If you are single then the first $ 5150 are not taxed. If married filing jointly then the standard deduction is $ 10300.

    You might not be considered a dependent if you contribute more than half your support for the year.

    States have their own taxes.
     
  5. LongArm

    LongArm

    In any case, there will be no gift tax owed. With a gift of $25k, the first $12k will be free & clear, and the next $13k will simply go against the estate tax exclusion. For that reason, your parents will need to report the gift to the IRS, but won't actually need to pay tax on it. One can gift up to $1 million above and beyond the $12k per year annual exclusion before any gift tax is owed.
     
  6. zook

    zook

    Update:
    Money from a savings account.
    Age 60-61 (23 Me Finishing College).
    Family income 60k.
    My income $0. I do have a job; 3 actually, all off the books, and legal.

    They will be getting the 6k, that's not the issue.
     
  7. zook

    zook

    So I guess, I don't have to give the money back and then retake it. I'll just keep it in the account. This was pretty easy.

    Thanks Guys,
    Zook
     
  8. sim03

    sim03

    Good one! Strangely enough, the IRS would not see it quite that way.
     
  9. bestdev

    bestdev

    you may consider asking a question on the taxforum - taxforum.us is the one I use.. you will get more knowledgeable response s their