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Updated for filing 2021 tax returns
Gift cards, cash, and old-school checks make for easy presents; there’s nothing quite like getting a birthday card and finding a fresh $20 bill inside (and you can always count on Great Aunt Judith to come through).
So what happens when it’s time to file your taxes? Does Uncle Sam want a piece of Great Aunt Judith’s gift?
Nope! Cash gifts aren’t considered taxable income for the recipient
That's right—money given to you as a gift doesn’t count as income on your taxes. Score!
Everything from that $40 gift card to your favorite restaurant for your birthday to the $100 your friends pulled together when your tire blew out is yours to keep.
Most of the time, the giver doesn't have to pay gift tax, either
Since gifts are coming out of taxable income, the giver is going to pay general taxes on that money, anyway, so there's usually no extra tax on top.
That said, if it's a big gift, some extra rules apply. If the gift exceeds $15,000 (yeah, that's a chunk of change!), the giver has to fill out Form 709 on their return to report the gift amount.
Even then, no extra tax is owed from gifts until the giver exceeds their lifetime estate of 11.7 million (as of 2021). Yeah, million. You probably have plenty of elbow room before you have to worry about paying taxes on gifts.
Rule of thumb? Unless you have $15,000 gathering dust in your wallet and decide to make a friend’s day, or Aunt Judith gives you money for a brand new car, you don’t have to worry about any extra forms. Just report your regular income like a model citizen, and cherish those smaller, tax-free gifts.
Feel good about taxes
It's actually possible. See, we know what kind of money you'll owe taxes on, and what kind won't increase your taxable income (like monetary gifts). That takes away any dread you may feel that you've left something out—or are paying more than you need to.
Nowthat feels good.
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