18 Dec Does a gift have to be reported as income?

Q. I have been thinking of gifting my sister $10,000. For me it’s just money in the bank. For her it might help pay some bills or a nice vacation. I’m wondering if she would have to report that as income?
— Brother

A. That’s a very generous thought.

We bet your sister will appreciate it if you move forward.

Gifts of a nominal amount are not taxable as income, said Bernie Kiely, a certified financial planner and certified public accountant with Kiely Capital Management in Morristown.

For federal purposes someone can give you up to $13.61 million before the giver has to pay a gift tax, Kiely said. In addition, someone can give you up to $18,000 per year before they even have to report it to the federal government. The $18,000 is what’s known as the annual gift tax exclusion, he said.

New Jersey does not have a gift tax, but it does have an inheritance tax, Kiely said.

“This tax applies to transfers on death. The inheritance tax does not apply to the family chain,” he said. “This means it does not apply to siblings, parents, great grandparents, children, grandchildren or great-great grandchildren.”

Email your questions to .

This story was originally published in December 2024.

NJMoneyHelp.com presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.