Do Cash Gifts Count as Income?

income, tax tips | January 12, 2017 | By Susannah McQuitty

A woman holding a birthday card with a $20 bill from a family member.

Gift cards and cash make for easy presents, and there’s nothing quite like getting a birthday card and finding a fresh $20 bill inside—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

Good news if you’re the recipient—any money given to you as a gift doesn’t count as income on your taxes, so you don’t owe anything on it.

That also goes for the extra bucks you got from Mom for gas, the $40 gift card to your favorite restaurant sitting snug in your pocket, and the $100 your friends pulled together when your tire blew out at school.

The giver may not have to pay gift tax either

The giver doesn’t have to report the gift on their taxes unless it exceeds $15,000. If the gift is under $15,000 (which is, if we’re honest, pretty likely), you’re home free and good to go.

In case the gift does exceed the cap, all the giver has to do is fill out Form 709 on their return to report the gift amount. Even then, no extra tax is owed from the gift until the giver exceeds their lifetime estate of 11.5 million. Yeah, million. (That amount goes down to 5.6 million in 2026, but that’s still a chunk of change.) 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.

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