Tax Documents for a Car as a Gift
Giving or receiving a car has several benefits -- but the Internal Revenue Service and state-level taxing authorities expect payments for taxable gifts. Several factors, such as marital status, determine who should file forms for gifting automobiles. Furthermore, the value of the vehicle affects the requirements for filing at the state and federal level.
Other People Are Reading
-
Affidavit of Vehicle Gift Transfer
-
The transfer of a motor vehicle as a gift requires the payment of taxes in specific situations, which vary based on state law. For example, in Texas, if you receive a car as a gift, you pay the tax only if the vehicle was given to you by a spouse, parent, grandparent, estate or children or parents related by marriage. Most states provide an "Affidavit of Vehicle Gift Transfer" form, or a similar form, to complete the tax-related transfer at the department of motor vehicles. In addition, both parties must complete a title transfer form to complete the transfer of ownership and should keep a copy to file with the annual tax return.
Affidavit of Heirship
-
In some situations, a decedent gifts a vehicle to a recipient through their estate. This qualifies as an inheritance. The recipient of the vehicle should file an affidavit of heirship, or other state form, with the local department of motor vehicles. If the estate went through probate, the executor of the estate can complete the title transfer. If the estate did not require probate, the heir must provide the court's ruling that probate was not necessary and a will that indicates the heir should receive the vehicle.
-
Internal Revenue Service
-
The value of the vehicle donation determines if someone giving a vehicle should file Internal Revenue Service form 709 - United States Gift (and Generation-Skipping Transfer) Tax Return. The value of the vehicle must exceed the annual exclusion for the year received, which was $13,000 as of August 2011. If the vehicle exceeds this amount, the person giving the vehicle must file the form along with her annual tax return.
Other Considerations
-
Relevant documentation should accompany Form 709 for vehicles that exceed the annual exclusion -- for example, documents that show the fair market value of the vehicle and the completion of the title transfer. Furthermore, married couples can gift a vehicle worth up to $26,000 before the Internal Revenue Service requires the submission of Form 709, according to SmartMoney.
-
