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Tax Law (Questions About Taxes)/Gift Money
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Question
QUESTION: Hi,
I don't work but am married and my wife works while I am in school and my parents gift me money each year to help us live- they give us under 12,000 dollars a year.
If I report what they give me I will be eligible for a large EIC refund. Can I or must I report what they give, and if I do report, where does it go on the 1040.
Thanks alot
Sam
ANSWER: Sam,
Thanks for your question.
The gifts from your parents are not earned income and cannot qualify you for a higher EIC. You do not report them on your tax return at all.
Hope this helps.
John Stancil, CPA
---------- FOLLOW-UP ----------
QUESTION: Hi John,
Thanks for the answer.
I have just one more question. I get a monthly stipend from my school about 900 a month- they don't give any w-2 or anything of the sort.
Is this money reportable and will it help for EIC?
Thanks a lot
Sam
If it is not earned income, it is not eligible for the EIC. Earned income is the only income that is eligible for the EIC.
If the stipend is a scholarship, it is not taxable to the extent the amount received covers your tuition and fees. Any additional amount is taxable. If it is for services rendered, it is fully taxable as earned income, but it is likely a W-2 would be generated.
Hope this helps.
John Stancil, CPA
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John Stancil, CPA
Expertise
I can answer questions on personal income taxes, partnerships, and some corporate income taxes. I can deal with some state tax questions. Limited gift and estate tax questions. I am also familiar with ministerial and church tax reporting issues. I teach tax and accounting at a small church-related college. Sales taxes and property taxes are state and local issues so I am not likely be be able to give you an in depth answer on those types of taxes. I have maintained a part time tax practice for over 35 years. I am a member of the AICPA, National Association of Tax Professionals, and the Institute of Management Accountants. Visit my website at www.johnstancilcpa.com. Also visit my blog, www.thetaxdocspot.com. Prepare and file your own taxes at www.1040stancilcpa.com
Experience
I hold a doctorate in Accounting, and four professional certifications: CPA, CMA, CGMA, and CFM. I passed all certification examinations on the first attempt, and received honorable mention for my scores on the CIA exam. I have operated a CPA firm for over 30 years and have taught accounting and tax at the college level for over 30 years.
Organizations
AICPA, FICPA, IMA, NATP
Publications
The CPA Journal, Florida CPA Today, Green Consumer, Green Business, Global Sustainability as a Business Imperative, Palmetto Review, NATP TaxPro Quarterly.
Education/Credentials
DBA University of Memphis
MBA University of Georgia
BS in Accounting Mars Hill College
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