My boss wants to buy me a gift. How do I account for taxes for this?
"Gifts given and received between business partners or employers/employees are treated as income, if they are beyond minimal value. If your boss gives you a gift, s/he should include it as part of your taxable wages for payroll purposes - which means that some of your wages should be withheld to cover income, social security, and Medicare taxes on it. At the end of the year, the value of the gift should be included in Box 1 (wages) of your form W-2. Assuming that's the case, you don't need to do anything special. A 1099-MISC would not be appropriate because you are an employee of your boss - so the two of you need to address the full panoply of employment taxes, not just income tax, which would be the result if the payment were reported on 1099-MISC. If the employer wants to cover the cost to you of the taxes on the gift, they'll need to ""gross up"" your pay to cover it. Let's say your employer gives you a gift worth $100, and you're in a 25% tax bracket. Your employer has to give you $125 so that you end up with a gain of $100. But the extra $25 is taxable, too, so your employer will need to add on an extra $6.25 to cover the 25% tax on the $25. But, wait, now we've gotta pay 25% tax on the $6.25, so they add an extra $1.56 to cover that tax. And now they've gotta pay an extra $.39 . . .  The formula to calculate the gross-up amount is: where [TAX RATE] is the tax rate expressed as a percentage. So, to get the grossed-up amount for a $100 gift in a 25% bracket, we'd calculate 1/(1-.25), or 1/.75, or 1.333, multiply that by the target gift amount of $100, and end up with $133.33.  The equation is a little uglier if you have to pay state income taxes that are deductible on the federal return but it's a similar principle.  The entire $133.33 would then be reported as income, but the net effect on the employee is that they're $100 richer after taxes. The ""gross-up"" idea can be quite complicated if you dig into the details - there are some circumstances where an additional few dollars of income can have an unexpected impact on a tax return, in a fashion not obvious from looking at the tax table.  If the employer doesn't include the gift in Box 1 on the W-2 but you want to pay taxes on it anyway, include the amount in Line 7 on the 1040 as if it had been on a W-2, and fill out form 8919 to calculate the FICA taxes that should have been withheld." The way I have seen this done in the past is the business will withhold taxes on the amount of the gift.  Very much like receiving a bonus.  There are probably other ways to do it where taxes are avoided like you boss could buy the gift for you personally.  Not sure about all the legal ways to avoid taxes on this.
The request for your parent's income comes from Form 8615, Tax for Certain Children Who Have Unearned Income.  I typically see this form appear as I'm doing my daughter's taxes and start to enter data from stock transactions. In other words, your earned income is your's. But if you are a dependent, or 'can be,' the flow avoids the potentially lucrative results from gifting children appreciated stock, and have them take the gain at their lower, potentially zero cap gain rate. I suggest you grab a coffee and thumb through Pub 929 Tax Rules for Children and Dependents to understand this better.  From page 14 of the linked doc - Parent's return information not available. If a child   can’t get the required information about his or her parent's   tax return, the child (or the child's legal representative)   can request the necessary information from the Internal   Revenue Service (IRS). How to request. After the end of the tax year, send a   signed, written request for the information to the Internal   Revenue Service Center where the parent's return will be   filed. (The IRS can’t process a request received before   the end of the tax year.) It also suggests that you file for an extension for the due date of your return. Include payment for the tax you expect to pay, say by plugging in $200K for parent income as an estimate.  My parents' accountant tells them I do not need it. Well, a piece of software told you that you do, and 3 people on line who collectively qualify as experts documented why. (Note, I am not full of myself. This board operates via the wisdom of crowds. Members DStanley, and Ben Miller, commented and edited to help me form a well documented response that would be tough to argue against.) I've seen agism go the other way on my job.   A Generation X'er Accounts Payable Clerk in my department was promoted to an Accounts Payable Supervisory role simply because she has kids and my Baby Boomer boss sympathized with her on a personal level. The punchline is this woman doesn't understand accounting on a fundamental level (she has some junior college education, no degree).  I (Generation Y) on the other hand had to train up my Baby Boomer boss in our industry over the course of a year. Attempt to teach him how to use our ERP system (he refuses to learn how to use our accounting system and he's the CFO, big red flag, we're going on year 2 now), cover for him when he make bone-headed Accounting 101 mistakes, and be the defacto department manager (I'm the Senior Accountant) because his Accounts Payable supervisor doesn't know how to debit and credit accounts correctly. The buck should stop with her when it comes to Accounts Payable transactions but she's too incompetent to handle the responsibility.  So now my boss is looking hire a new staff to the department and I'm gunning for a Manager's title (I do the managing already I just want the official title and pay raise). In addition I would like to have an official direct report, instead of all this  unofficial direct reporting going on.   I found out last week that I'm not up for consideration, but the girl that has NO COLLEGE DEGREE who was in my position before me, but left (knew someone who got her a better job) is on the short list for the position. Of course she's a Generation X'er. I'm more experienced technically than she is, I have less years of experience but my skill set is larger, I'm much better educated, and I bring database administration and programming to the table in addition to Accounting (Accounting ERP softwares are essentially databases). I even fixed the tax mess she left the department on the way out.  I suspect the reason why I wasn't up for consideration is because I stand out. I'm young (28, look young), gym fit (coworkers are all overweight), and no kids (that seems to REALLY single me out). Everyone else never learned what a condom was and had children around 16-19 years of age. So instead of the workplace becoming a meritocracy, it's a game of who can put themselves in bad situations and garner sympathy for pay raises and promotions they don't deserve. "It took me a very longtime to learn that I no longer need to live like a starving student... and even now I live like a well-off student. And that's OK -- my needs and tastes are mostly simple. There's no reason to spend just for the sake of spending... but if you want something, and really can afford it after setting aside savings for retirement and emergency funds and basic operating capital, go for it. It may help to pick out a specific thing you want, or want to replace. My ""rules"" used to say that i was always allowed to spend money on books, music, and needed tools. Then i convinced myself that shelves are tools for storing other things. And that furniture is shelving for people. And that art, if it really speaks to me, is akin  to books. And that a decent instrument is a tool. And that my time has value, so sometimes it's less expensive in real term to throw money at a problem rather than scheduling my life around it. One step at a time, with all the steps making sense. I will still spend entirely too long agonizing over minor purchases, at times -- but that's about convincing myself that I like the choice I'm making, not about the price  per se. Meanwhile, saving means you can buy things later without having to borrow. The semi-student routine , and waiting until i was ready to buy,is why i had the value of a house in my investments when i was ready to buy one. And is why I'm almost at my target number for retirement well before my planned retirement date. One other thought: if you're comfortable buying gifts for others but don't tend to spend on yourself, you aren't a miser -- just frugal." "There are only two things you can directly do with the money in an Amazon gift card: you can keep the gift card, or you can put the money into your Amazon account.  There aren't any other options.  You can't deposit the value into a bank account or anything like that.  So, as far as safety, those are the only options you need to consider, because there's nothing else you can do. (Okay, there is one other thing you can do: you could sell the card to someone else, or barter it for something you want.  But you can do that with anything.) The ""gift card"" is basicaly just a string of numbers and letters that you put into your Amazon account and it credits you with the appropriate amount of money.  So yes, it can be stolen.  If you haven't redeemed it yet, someone could find the code by hacking your email or looking over your shoulder or whatever.  If they redeem it, you won't be able to do so. As for your edit: If I don't transfer the balance of the Amazon egift card to my Amazon account, can I transfer the balance to other accounts or use the card to buy other gift cards? If you don't transfer it to your account, you can transfer the balance to another account by giving the code to someone else and letting them deposit it in their account.  You still won't be able to buy other gift cards with it, because you can't buy anything with it until it's deposited in an Amazon account, and once it's deposited in an Amazon account, you can't buy gift cards with it because of their policy. If you don't want the restrictions imposed by Amazon, don't buy Amazon gift cards; instead, just use your actual money to buy things.  If you're worried about the cards being stolen, just deposit them into your account right away and you eliminate the risk of them being stolen.  If, as you say, you bought the cards for yourself, there's no reason not to do this; presumably you bought them so you could buy things on Amazon, and you'll have to deposit them into your account eventually anyway to do that, so just put them in right away. I don't know specifically how Walmart cards work, but I assume they're the same.  In general, anything called a ""gift card"" offered by a particular retailer works the same way: you can't do anything with it except buy products at that retailer. The only thing that really makes Amazon different is that the only way to use your card is to add the money to your Amazon account, because the only way to pay for things on Amazon is with an Amazon account.  There's no way to spend just some of the value; you have to deposit it all into your account.  With gift cards for retailers with physical locations, you can usually use the value up piecemeal, by actually going to a store and spending just enough to buy something.  (I assume Walmart works this way, although I don't know if you can use an e-gift card this way there.)" Since you aren't contributing enough to count your parent as a dependent, there is no tax benefit to you for helping them. Gift tax is paid by the giver when total gifts to an individual exceed $14k/year and the lifetime exclusion of $5.49M has been exceeded. If your annual gifts exceed $14k (subject to change, as is the lifetime exclusion amount) then you have to file Form 709 with your return, but you will not pay gift tax unless you've both exhausted the lifetime exclusion and gift over $14k/year. If you pay medical bills directly, that amount does not count toward the $14k/year limit, so you could likely assist in excess of $14k/year and still avoid having to file the extra form. Most assistance programs are income-based, and gifts do not count toward income, but you'll want to check on the specific requirements for programs they are enrolled in. "I have heard that I can give 10k as a gift in cash for my aunt to take   on the plane. Please don't, for her own safety. Don't know when was the last you've been to Russia, but that's not a place to walk around with $10K in cash in your pocket. For the rest, the 20k, I am not sure what is the best course of   action. Would something like Western Union, Paypal or Bank Wire Transfer be the best course of action?  Wire transfer would be the safest option. Would there be tax implications for me as well? Depends on where you are tax resident and where you are a citizen. Some countries have ""gift tax"", but most don't. If you're a US tax resident, then you're subject to US gift tax rules. Your gifts are taxable if they exceed $14K per year per person. So your $30K to your mom is taxable. But your $10K to your mom, $10K to your dad and $10K to your aunt is not. You cannot however control what they do with it." assuming you are in the USA, i would recommend making this a gift.  you can gift someone up to 14k$ per year without paying a gift tax. additionally, you can gift someone up to 5430k$, but it is a one-time deal (tied to inheritance tax).   you can have a general expectation with the giftee that they will return the money with some interest on some schedule.  you can even write that payment schedule down.  but for legal, tax and personal relationship reasons, you should both consider all these payments gifts. if you think failure to repay will put a strain on your relationship, then you shouldn't make the loan.  if not, then the payments in both directions really are gifts. as a gift, legal documentation can be really minimal. really, only the gifter has to document anything, and that is just on their tax return. even then, i think it is only necessary if you exceed the 14k$ annual gift limit. i would however recommend documenting any interest rates or payment schedules for personal reasons. being a gift, these numbers are just guidelines, but at least you won't find yourself arguing about whether or not the guidelines are being met. depending on how large the amounts involved are, you might want to spread the load over several people to stay under that annual limit. but the limit is per tax year, so you could do half now and half in january. "Am I right to say that no tax needs to be given for the annual ~$130k   USD, since they are considered as annual gift tax exclusion? Not only that you're wrong, but it also looks like a tax fraud, not just mere avoidance. You'll have hard time proving to any judge or jury that the gifts are ""in good faith"". By the way, $5 a month is below minimum wage."