We are planning to give a relative a monetary gift of $10,000. I was looking around on the Net to try to learn about possible federal income tax implications. Much to my astonishment and surprise, it seems that the giver
money (me) might have to pay a gift tax. The giver
? Could this be true? It defies logic and common sense. If anyone had to pay taxes on a gift, why would it not be the receiver
of the money and not
the giver? I would be the giver in this case and would not be receiving
money. I would think the recipient of the money, if anyone, would have to claim the money received as income and not me the giver.
Could someone explain the reasoning why the giver and not the receiver would be liable for gift tax?
Thanks to everyone in advance.