Ask HN: Do you or someone you know give money to your parents?
I've been trying to find tax / life advice about giving money to parents and I've been unable to do so. Every year or two I give my parents about $10-15k. This year I'm giving them $30k and I'm unable to find any relevant details about this.
Does anyone else give money to their folks? Is there any guidance on how to do this? I'm writing a check but in the past have done cash, but I find it all very inconvenient and confusing for tax purposes.
Thanks
114 comments
[ 3.9 ms ] story [ 172 ms ] threadhttps://www.irs.gov/businesses/small-businesses-self-employe...
TLDR:
- gifts are not tax deductible.
- gifts are taxable but only if above $17k per person.
- gifts for medical expenses are excluded from taxation.
I’m not a financial professional, this is not a financial advice.
Then you don't even have to file the gift form (I think it is 709...) and pay no tax.
You do not have to pay a tax anyway until you give away a total of $13M in your life, excluding any amounts you gifted that were less than $17k or less per person per calendar year.
If he is married they can give double without adding it to their return.
There is also more info like a lifetime tax free limit but adding the form to the tax return is annoying regardless and it's best to save that limit for later.
The lifetime limits are currently 11 million, which means that the first 11 million you give will not be taxed.
These laws fundamentally exist to constrain how much wealth can be passed down outside of estate tax, which is the main concern of the article you have linked. If you don't quite cross all of the t's when giving a loan to an older family member (which is the complete opposite of trying to push wealth forwards in time), it's unlikely the IRS is going to be too concerned.
Also, there is an 11M lifetime limit that can be tapped beyond the annual gift amount. However, you generally have to file forms when you make such gifts. [1] So although you can give up to $11M during life, you will likely need to file forms in order to not get into trouble. Also, if you have an estate plan, it was very likely drafted with the understanding that you have your entire $11M left intact at death, which allows for certain estate planning techniques. If you have blown through a bunch of it during life, you may wreak havoc on the carefully laid plans of your trust/estate.
1: https://www.irs.gov/instructions/i709#:~:text=If%20you%20are....
GP said that gifts are taxed if you exceed the annual limit, and this is 100% wrong. The only way you can be taxed on gifts is by exceeding the lifetime limit.
The annual limit determines if you need to report your gift to the IRS or not, but nothing else.
If you stay below the annual limit every year, you will never exceed the lifetime limit, unless you and the recipient live to 140 or something, so the different limits are related, but that's it.
It can lead to problems with your estate when you die, and result in penalties and interest (from the date of the gift). See https://www.forbes.com/sites/bobcarlson/2022/02/24/avoid-the...
> If you stay below the annual limit every year, you will never exceed the lifetime limit, unless you and the recipient live to 140 or something, so the different limits are related, but that's it.
Actually, if you stay below the annual gift limit every year, you can never exceed the lifetime limit. Only gifts in excess of the annual limit count toward the lifetime amount.
No, he said “only if” not just “if”, and this is precisely, 100% correct:
X only if Y = X does not occur except when Y occurs (but does not specify whether X cab fail to occur if Y occurs)
X if Y = X always occurs if Y occurs (but does not specify if X can occur without Y)
X if, only if, Y (sonetimes written X iff Y) = X occurs always and only when Y occurs.
(Actually, he said “are taxable”, not “are taxed”, so “only if” would also be correct, more on that below.)
> If you stay below the annual limit every year, you will never exceed the lifetime limit, unless you and the recipient live to 140 or something
No, for two reasons: one, gifts that are below the annual exclusion aren’t taxable and don’t count against the lifetime exemption. Secod, even if you just passed the exclusion for a single recipient (so, you had a taxable gift $1 more than the exclusion level each year—note, the full amount is taxable if you exceed the exclusion), you would never (given historical relationship) reach the lifetime exemption, which annually has increased by more than the annual exclusion.
Gifts of the type subject to tax, to a single recipient, in a single year, exceeding the annual exclusion amount are taxable and must be reported. (Note that the annual exclusion is per recipient from a donor.)
But taxable gifts are only actually taxed on the amount the donor has exceeded the current lifetime exemption (across all recipients).
Is the $11m limit based on the disburser? So I could give $17k per person year, but if I did that to 650 people, I would be taxed after that year?
Generally, I think it’s people in between who need the advice. Someone who gives away $11M should have an advisor; if i give $17k to each of my kids per year, it’s in the grey area and I might not have great legal advice.
If you give more than 17k per year to a kid but will never give away 11m you just need to disclose it on a tax form, you don't need to pay a gift tax. (State taxes can have their own rules)
$12.92 million currently (2023), actually. $12.02 million last year. $11.7 million in 2021, $11.58 in 2020.
The last time $11 million was correct to the nearest million was 2019 ($11.4 million.)
No, if you exceed the annual per-person limit you have to report your gift, but you're not taxed on gifts unless you exceed the lifetime per-person limit of almost $13 million.
The reality for many of us who grew up in poverty and may have 'made it' to a greater or lesser extent is that our families are likely didn't. It's shocking to me how many M's and Z's don't see themselves as being responsible for their families. I find it highly disappointing.
"Kind"? "Nice to do"? Sure.
But a responsibility? Absolutely not.
If I ever need day to day care for basic needs, I hope I can put myself out of my misery. I want society’s resources to go towards the young, not to keep 80+ year olds limping along.
I watched my parents spend their youth taking care of day to day needs for my dad’s elderly parents. What a waste. My grandparents lived far too long, especially at my mom’s expense.
That said, we have drifted very far from the nasty, brutish, and short version of prehistoric society, where your parents might be some of the main people you ever interacted with. Taking care of your parents in that context is quite obvious, because when you were helpless they took care of you, and otherwise no one will take care of them.
Well, let's be clear, that is far from universally true.
There's also degrees of care.
I absolutely see where the GP is coming from: my parents chose to have me, I didn't choose to have them. So why would I owe them for simply living up to the responsibilities they chose to take on?
Now, for amazing, supportive parents, the child will want to support and care for their parents when the time comes.
But not everyone has good parents, and I do not believe a child has a responsibility to care for an absent, abusive, or otherwise bad parent simply by dint of genetics.
This belief is common enough that in some circumstances you have not just a moral but legal responsibility to support your parents:
https://en.m.wikipedia.org/wiki/Filial_responsibility_laws
No one can make you care about other people, but if you choose to do so, your parents are a pretty good choice. They are the only people on the planet who will love you without contingencies. And they won’t be around forever.
It's full of nuggets like:
- you're not responsible for your parents, you should never have to take care of them because they gave birth to you.
- you owe you family nothing.
It made me sad, if it weren't for my parents I wouldn't be here today.
On the other hand, it's super important for parents to not view their children as property. You're raising something to eventually become a fully fledged, full-agented human, and if they still feel obligated to you purely because of your blood (vs out of seriously analyzing and then concluding that a relationship with you is worth investing into) then you've failed to raise this human with a full sense of agency.
Yes, children shouldn't have to take care of their parents just because the parents birthed them. Children should take care of their parents because the child-parent relationship continues to be great.
I am a parent, and I want my kids to feel like they owe me nothing. If they want to help me or or spend time with me, I want it to be because they enjoy it. And I absolutely do not feel that they need to take care of me.
I do not want to become a burden for them in a way that prevents them from doing what they want.
But even for people for whom that's not the case, you do not get to impose your morals on them. The idea of owing your parents anything more than you owe the rest of society is a nonsensical social construct that is thankfully dying out.
In your case, my comment likely does not apply as it sounds like you were abused horribly as a child, but the statement above is an extreme perspective to take generally, given that a person’s parent(s), typically at the least, provided them with some level of care when they were infants and young children. Of course, there are rare instances of horrible abuse, but it is not endemic. Also, one cannot even exist without parents, so we owe them at least that consideration versus a random person.
Most parents sacrificed some of their future to have children and ignoring that fact is usually (except in extreme cases) reflective of selfishness and self-absorption from the increasingly entitled populations of wealthy countries.
That's a choice they made, though (and usually for selfish reasons). It's like giving someone a gift and then getting upset when they don't pay you back for it.
That... is paying them back, though?
> It also sets a great example for your kids to consider if the day comes when you are old and in need.
That would be the selfish reasons I mentioned. I consider it unethical to expect this of one's children.
in fact, at least in germany this responsibility is even law. if i were earning above my needs, and my parents were on social welfare, i would be legally obligated to support them. same goes for siblings and children, and possibly other close relatives.
so here society does impose its morals.
or, put differenly, i see it as me owing it to society to take care of my famyly by myself instead of relying on society to do it for me
Deeming parenthood a "social construct" and deserving of no attention from the child is ... you must not have kids of your own. That is the only way to explain your current attitude.
I do not have children of my own, and don't plan to. I think you have the causation backwards, though: this is an effect of my unusual views on families and parenting, not a cause.
(Invariably, around this point, someone snarkily tells me it's a good thing I don't have kids. I unironically agree. Most people shouldn't, and I am very much in that group.)
I wish society didn't seem to be so quick to judge having kids as a negative thing.
I wish society didn't seem to be so quick to assume everyone would be happier with children. Some people legitimately are, but it is not a guarantee.
Had I not been born, I wouldn't know the difference, because I wouldn't exist. That I do exist now is irrelevant, because we're talking about a hypothetical universe where that's not the case. Not being born is a fundamentally different sort of thing than being alive and then dying. (If it wasn't, everyone who can physically have a child and isn't doing so right now would be committing murder.)
Everyone involved would've been objectively better off had I not been born. Both of my parents would have been happier. Everyone around them who had to deal with the fallout would be happier.
To be absolutely clear, this is not an expression of any sort of guilt on my part - I had no input into this terrible decision, and I take no responsibility for it. But any observer would have called it an obviously bad idea, if they didn't have to dance around the psychological and social implications of saying that within earshot of the child. One of the benefits of being an adult with a fully formed brain is that I can now look at such hypotheticals objectively, without conflating them with my own self-worth.
So my past, as terrible as it was, is a sunk cost. If I spontaneously died right now, it wouldn't undo any of that, nor make me or anyone else happier. The best I can do with the situation I am currently in is to keep living, and try not to repeat the mistakes of others.
It’s not even imposing morals on you. The way you’re acting goes against the way humans have acted for thousands of years. To point out that you’re most likely wrong for making that decision shouldn’t be that controversial
> However, if it wasn't them, I'd be helping someone else in a similar position.
Exactly. I just skip to this part. Ignoring any sort of judgement of their actions, there are many people who need help far more than my parents do, and I'd sooner give money to them.
If my parents legitimately were the most in-need people I could find, I'd have some mental gymnastics to do to justify this, but that is not the case.
You are saying this as you are charging rent to your mother? I have never heard of anyone doing that.
There are other factors. I make a loss on renting this property, which has to be reported for tax reasons. If I was charging below market rates it could raise flags. Because my mum also receives an allowance as full time carer for my aunt, it additionally allows them to also claim a bit in rent assistance.
This felt a bit off at first but I have confirmed it's all above board. Better than paying off someone else's mortgage. Most importantly, a few years ago my mum was homeless and my aunt had nobody willing to care for her. This way they have a secure roof over their heads so I have no regrets.
Then there's my brothers who have moved in rent-free while they get back on their feet after a rough patch. It's tough for a lot of people out there, so we have to do what works.
> I avoid giving money directly unless as cash because they prefer it that way
Lots of people want to pay their own way, but old people often have a warped sense of how much things should cost (see the "I worked a part time job to pay for college" thing). So letting their mother think she's mostly paying for her own apartment is itself a kindness.
Maybe you need to get out more.
I'm 30 and it's hard to see a future where I'll have any of the financial advantages they did. It's possible, if things go amazingly well, even though I make at least 2.5x their salary at any given moment (on the very low end for a software dev in general with >5 years experience)
I likely won't have kids, might not ever own a home, might end up homeless again, but everyone's situation is different.
Granted, they had kids accidentally, and screwed up their entire adulthood from day 3, but things seemed a little more forgiving because their parents didn't do that.
Modern society appears to make many of those evolved tendencies no longer a priority. However, with a bit of a deeper stare, many of the ills we all suffer in this world can be seen as an extension of this atomization. I suppose my broader thesis is that I think we're all responsible for one another in some way. It doesn't need to and shouldn't go beyond your means, but if you can help someone else out, you should. Another example, is that during the pandemic, I let some neighbors and friends take over sections of one of my yards for gardening. They ripped up an area of maybe 200 sq feet, and planted a nice garden for themselves. I had already built and established my own raised beds, but they lived in an apartment, and didn't have access to a community garden. Its a small nicety, a tiny bit of community, but it was basically no effort and minor cost to me to do so.
I'm by no means suggesting that you should impoverish yourself to help other people. I'm following a broader thesis that human bonds and community are things that require building, not bought or borrowed. I do so where I can when I have the means to do so.
And this is where my disappointment with M and Z lay. I don't blame them; I attribute it to the commercialization of all things that has resulted from whatever this modern quagmire we're in is. I'm squarely an 'M', but so many of this generation seem to think that community is something they can buy. They don't seem interested or to understand that sometimes you have to dig your heals in and build the world you want to see. I don't think B was any better in this regard, but M and Z don't have the advantage of a favorable game board to play on. We'll have to do things differently to win.
I think maybe I got lucky, in that I had a period of a couple of years of homelessness after I got out of military service. I ended up in the anarchist/ revolutionary scene, and saw people building a community they wanted to be a part of. They did what they needed to for survival, and a big part of that was building a community. Creating social bonds and ties. Giving and receiving small kindness from one another, like a deal on rent or a space to garden. Offering kindesses where you can is one way to create community, and if you can afford to do so, you should. I've carried that sentiment with me through the decisions I make. If I can make an effort or offer a small kindness, I will. I'm trying to build community where I stand. Its not something I expect to buy or have to rent. It comes from within ourselves.
Is it really so shocking given the vast generational wealth inequality in much of society today? In many families the previous generation who may have been working class and earning relatively little, are now property owners, having bought when housing cost far less relative to incomes.
A generation with property and pensions don't need support from renters on historically low wages.
Right, but we are discussing Mom and Dad and their 'bundles of joy' here, not generational demographic subsets.
Plenty of boomers have lots of property, but its a very bimodal bag of have lots and have nothings.
Probably because most Z's are still just entering the workforce, and most M's have just began to earn decent money, because of the 2008-09 banking crisis. HN is not representative of the population at wide, so the sentiment you're seeing probably doesn't apply to people making $200k+ total comp.
> I find it highly disappointing.
Do you do anything about it?
I’m on the older end of GenZ and my parents are middle aged happily working good jobs to support themselves and the new set kids they decided to have.
GP really just seems like they wanted to bitch and whine about “kids these days”.
Not really. Both things can be true. Some Gen Z/Ys absolutely loathe their parents, some for good reason and some, not so much.
And shit if we’re making sweeping generalizations about generations based on personal anecdotes, both my GenX parents had very poor antagonistic relationships with their parents. So don’t try to pin everything on people who came after you.
https://duckduckgo.com/?q=tax+benefit+of+supporting+parents&...
https://duckduckgo.com/?q=tax+benefit+of+supporting+overseas...
I am assuming you are in Canada.
Just like you're calling me an idiot, yeah, it's easier online to assume the other side is an idiot, and that's what I did.
If everyone involved is a US citizen, this year's gift tax exemption is $17000 per recipient. That means you can give up to $34K written as $17K checks to each parent with no fuss.
There may in your jurisdiction be nonobvious ways to structure this kind of thing that would be advantageous to both you and your parents.
Here in Norway, it's more or less unheard of to give money to your parents, unless they're financially screwed (in other words, debt) - but that's usually a very temporary thing.
But I've worked with people from all over Asia, and many of them would regularly send money back home. Especially Indian co-workers would send significant sums back home.
As I am their age when they raised me and am in the 1% of earners for my age bracket, I would like to do what I can to make their lives a little more extravagant for my own conscience.
I never worked on this type of matter directly (I was on the corporate side, not personal), but IIRC there is a form you can fill out to make one gift and have it tap both your and your spouse's gift amounts. But if you're just doing checks, you can easily make them out in four separate checks. The form is useful if you're giving them a car or painting that is below the $68k but above the individual-to-individual gift amounts.
1: https://www.morganlewis.com/pubs/2022/10/irs-announces-incre...
Not a tax lawyer, ever, but I know the part that is missing in this statement: “without incurring any immediate or future tax liability [0] or immediate reporting requirement.” If you exceed the per-donor per-recipient limit, you have to file a gift tax return, and the gift counts against your lifetime exemption limit (currently $12.92 million, but also indexed annually by inflation.) If your total lifetime reportable gifts ever exceed that, you’ll have to pay gift tax on the reportable gifts over the limit, and if yiur estate exceeds whatever is left ofnyour exemption when you die, your estate will pay estate tax.
[0] barring a future but retrospective change to tax law, which is theoretically possible but impossible to plan around.
Also, there's a tradeoff in writing something quickly and having it get lots of eyeballs, at a time when those eyeballs are seeing other advice that is much less correct.
Lastly, I did refer to almost all of these specifics in my other comments on the page. But there is no way to include all possible detail in a comment like this, and if someone did it would not get read nearly as much. Also, retroactive changes to tax law are very disfavored at law and would undoubtedly be challenged in court.
I don't mean to be hostile, but I really think its much better phrasing the limit as ~$12 million before being taxable, and just mentioning that you have to report it on your taxes above a certain limit in a given year and that it eats into a lifetime ~$12 million exemption. I basically see people get this wrong any time they mention it on the internet or in real life. I can see though in writing this it does get a bit confusing to say succinctly.
I gave them a secondary credit card on my account and told them to spend up to 1k per month on it.
They rarely reach that level and my mom is always checking in with me to see if purchase X is ok. I have to remind her that I consider that money hers anyways, she can do what she wants with it.
They can afford to live without that money but to me it's the extra that makes their life more enjoyable. They sometimes go out to restaurants (which they pretty much never did), go see shows from time to time and have gotten themselves some new clothes also which they hadn't done more than a handful of times in the last decade.
I'm gonna pay for dental work they need and also vacations together with them.
Not answering your actual question but I hope everyone in this thread who dreams of being able to give back to their parents is able to do so one day.
Then I pay her fixed expenses and give her cash whenever she wants. She mainly spends money on yarn and LPs.
After retiring, her only trouble in life is her health and her children who beg money from her.
She can't refuse them, but she kept saying she doesn't want to. Eventually we agreed that I admin her money.
We're planning that she moves in with me and my spouse.
Cooking for her every day and removing all economic worries is the best I can give her.
When she leaves Earth, she can decide who her money goes to. (I'm not on the list.)
My biggest concern remains my mother, she is frugal for the small things, but she was highly incompetent with her financial life. She started way ahead (super expensive home from parents, education), she faced a divorce and sold the home, but those money are still lasting nowdays (30 years later), but not very much. She never invested any of that and faced economical challenges to grow me and my sister. Now, back to myself, I started life with 0 money from my mother but education was fully paid (pretty common in the country I come from, since it's public education). She obviously gave me plenty growing up, but she didn't plan anything for retirement.
I will of course feel the urge to help, but it's frustrating to think that given the money she had once sold the home, she could have invested those money and live without working and still own a smaller property.
Essentially, I have this mixed feeling of having to care for a person that started with way more than I started with, but due to poor management, it got all wasted.
I don't even know how to handle those emotions.