Cash gifts?

[NeedNewStart]

My house will go into foreclosure at some point this year. There will be a $100k - $200k deficiency. There is a big chance that I will get a deficiency judgment but it will probably take a long time. This is my only debt. So I'm not sure if I will need to file BK or not. I'm preparing for the worst.

I just got a large tax refund and want to give the money to my fiancee. If I wait at least a year to file BK will this be OK??? I will give it to him in cash.

[AngelinaCatHub]

As far as bankruptcy, you probably will be OK. However if it is above 10K he will be obligated to pay tax on the 'gift'. You might think of putting it into a IRA. A Roth IRA is the best as you can take it out anytime without a penalty since you pay the IRS tax first. It cannot be touched in bk or a Judgment. 'Hub

[JoeBankrupt33]

Actually, he doesn't pay tax on the gift. For large gifts, the donor needs to report in on their taxes, and nobody will need to pay any taxes in the current year. Also, the current amount you can give to each person is $12,000 per year.

What happens is the gift amount in excess of $12,000 is deducted from the donor's "unified credit." When you die, your unified credit is used to offset estate taxes. So, if you give away a lot of money throughout your life, then you will have less to protect your estate when you die. Ofcourse, you can choose not to reduce your unified credit and pay the tax now.

But, the fact still remains, you will need to handle very large gifts on your taxes.

[NeedNewStart]

Ok great info, thanks!

So now I'm thinking that I would like to cash out my tax refund and use it for expenses over the next few months. Some of the expenses are not going to be considered exempt. I would like to use it on exempt things but there is really nothing that I need. I mean I can buy some food and clothes and tires but other then that.... I live in an apartment and don't have many expenses.

If I cash it out and just spend it..... how long should a I wait to file? A year? A few months?

[keepmine]

Ok great info, thanks!

So now I'm thinking that I would like to cash out my tax refund and use it for expenses over the next few months. Some of the expenses are not going to be considered exempt. I would like to use it on exempt things but there is really nothing that I need. I mean I can buy some food and clothes and tires but other then that.... I live in an apartment and don't have many expenses.

If I cash it out and just spend it..... how long should a I wait to file? A year? A few months?

First thing you should do is, see if you can exempt it. If so, a lot of your problems are solved.

[NeedNewStart]

I agree with you Keepmine, but as I said before. There isn't really anything I can think of that would be exempt. The only thing for me are lawyer fee, tires, food, clothes. That's all....


I need to use up about $7000.

[JoeBankrupt33]

You could also use the money to pay down items that are exempt, such as your car. But, you don't want to get in a position where you have more equity in your car than you can exempt. I'm think that you would want to wait 6 months after doing this, but I'm not sure.

[keepmine]

I agree with you Keepmine, but as I said before. There isn't really anything I can think of that would be exempt. The only thing for me are lawyer fee, tires, food, clothes. That's all....


I need to use up about $7000.

You need to understand the concept of exempt in the bk context. By that, look at your state exemptions Do you have a wildcard that you could use to protect the refund? If you're filing usng federal exemptions there is a huge wildcard.
If you're going to be able to delay filing for awhile, prehaps an IRA contribution.
Have you talked to a lawyer yet?