If someone just handed me a million dollars as a gift, would the IRS count that as taxable income?

So what about those YouTube videos where MrBeast gives away cars and houses and stuff? Does he have to pay gift tax on all that? And do the recipients have to pay income tax?

Wait I'm confused. So if a random billionaire decides they want to give me $1M out of pure generosity, they'd have to pay gift tax but I wouldn't owe anything? That seems too good to be true.

For YouTube giveaways like MrBeast, those are typically considered contests or promotional giveaways rather than true gifts, so the recipients would likely need to pay income tax on the value of what they receive. The company giving away the prizes would issue a 1099-MISC form to the recipients and report it to the IRS. Regarding a billionaire giving you $1M out of generosity - yes, that's correct. If it's a true gift with no expectation of anything in return, you wouldn't owe income tax. The billionaire would need to file a gift tax return since it exceeds the annual exclusion amount, but they would only pay actual gift tax if they've already used up their lifetime exemption of over $13 million. This is exactly how the gift tax system is designed to work.

Is that service free or do they charge you? Seems really helpful but I'm always suspicious of tax sites that want your info.

can it handle more complicated situations? Like what if my boss gave me $20k but said it was a "gift" to avoid payroll taxes... would the system catch that it's not really a gift?

The basic analysis is free, and they have paid tiers for more comprehensive help. They don't require any sensitive personal info for the initial assessment - just details about your tax situation. I was comfortable using it. For complicated situations, yes it definitely handles those! The system specifically asks questions to determine if something is truly a gift or disguised compensation. In your example with your boss, it would flag that as likely taxable income rather than a gift because of the employment relationship. The IRS looks at the intent and relationship between the parties, not just what someone calls the payment.

Wait how does this even work? I thought it was impossible to get through to the IRS these days. Do they have some special access or something?

Sounds like a scam tbh. No way they can magically get through when millions of people can't reach the IRS. Did they ask for payment info upfront?

It's not special access - they use technology to keep dialing and navigating the phone system automatically. When they finally get through to an agent, they connect you. It's like having someone wait on hold for you. I was skeptical too at first. It's not a scam though - they don't ask for any tax info or personal details beyond what's needed to connect the call. They're just solving the problem of the ridiculous wait times. I was desperate after trying for days on my own and it actually worked. Totally worth it to get a definitive answer from the IRS about my gift tax question.

What exactly counts as a "large deposit"? Is there a specific threshold where banks have to report it?

Banks are required to report cash deposits over $10,000 to the government using a Currency Transaction Report (CTR). But they can file Suspicious Activity Reports (SARs) for any amount if something seems unusual. For a million-dollar deposit, you'd definitely want documentation showing where it came from - like a gift letter from the person who gave it to you. Even though gifts aren't taxable income to you, unexplained large deposits can trigger investigations. Some banks might even temporarily freeze your account until they understand the source of the funds.

Don't forget too that in some states there might be state-level gift taxes or different rules. Always check your specific state laws too! i got hit with a surprise state tax when i got a large gift from my grandma in connecticut.

This is really helpful advice! I never would have thought about the "basis" tracking aspect. What exactly do you mean by tracking your basis in the money? Is that different from just keeping records of the original gift amount? Also, do you have any recommendations for what should be included in a formal gift letter? I'm wondering if there's a specific format or language that works best for IRS purposes.

Great question about basis tracking! When I say "basis," I mean the starting value of the gift for tax purposes. For cash gifts, your basis is simply the amount you received - so if someone gives you $1M cash, your basis is $1M. This becomes important if you invest that money and later sell investments at a gain or loss. For example, if you use the $1M gift to buy stocks and later sell them for $1.2M, you'd owe capital gains tax on the $200K profit (the sale price minus your $1M basis). For gift letters, you don't need fancy legal language, but it should include: - Date of the gift - Amount given - Clear statement that it's a gift with no expectation of repayment - Confirmation there are no strings attached - Both parties' names and signatures Something like: "I, [Giver's Name], am giving $X to [Your Name] as a gift. This is a voluntary gift with no expectation of repayment or services in return." Simple but effective for IRS purposes!

Great question about international gifts! Yes, there are definitely additional reporting requirements when receiving large gifts from foreign persons or entities. If you receive more than $100,000 in aggregate from foreign persons during a tax year, you're required to file Form 3520 with the IRS. This is just a reporting requirement - you still don't owe income tax on the gift itself, but failing to file can result in hefty penalties (up to 35% of the gift amount!). The form helps the IRS track large international transfers and ensure people aren't using "gifts" to hide taxable income from foreign sources. You'll need to provide details about the foreign person who gave you the gift, the relationship between you, and the nature/value of the gift. Also, if the foreign giver puts the money in a foreign trust for your benefit, there could be additional forms required (like Form 3520-A). The international gift rules are definitely more complex than domestic ones, so if someone's expecting a large international gift, I'd strongly recommend consulting with a tax professional who specializes in international tax matters.

Excellent question about installment gifts! Yes, each payment would be treated as a separate gift for tax purposes, which could actually provide some tax advantages. If someone gives you $200K per year for 5 years, each year counts as a separate gift against their annual exclusion and lifetime exemption. Since the annual exclusion is $18,000 per person for 2025, they'd still need to file gift tax returns for each $200K payment, but it might help them manage their lifetime exemption more strategically. From your perspective as the recipient, you'd still owe no income tax on any of the installments since they're true gifts. For banking purposes, you'd want to document each $200K deposit with gift letters, just like you would with a single large gift. Banks will still report large deposits regardless of whether it's one million or multiple smaller amounts. One potential advantage of the installment approach is that it might seem less suspicious to banks than one massive million-dollar deposit. But you'd still want clear documentation for each payment showing it's part of an ongoing gift arrangement. The IRS doesn't care about the timing as much as making sure each payment truly qualifies as a gift rather than disguised compensation or income.

This is such an important point that people don't think about! You're absolutely right that this could get really messy from a tax perspective. The IRS looks at the intent and circumstances at the time the transfer was made, not what happens afterward. If it was genuinely intended as a gift when given (documented with a proper gift letter), then it should be treated as a gift for tax purposes even if the giver later regrets it or tries to call it a loan. However, if there was always an understanding that it might need to be repaid - even if not formally documented - then it was probably a loan from the beginning, not a gift. The IRS can look at the relationship between the parties, any informal agreements, and whether there was an expectation of repayment. The scary scenario is if you treated it as a gift (didn't pay income tax on it) but the IRS later determines it was actually a loan or income. You could end up owing back taxes, penalties, and interest. Even worse, if you've spent the money and can't pay it back, you might still owe taxes on money you no longer have. This is exactly why proper documentation is so critical for large transfers - you need that gift letter to prove intent at the time of transfer!

This is really great advice from a planning perspective! The timing point is especially smart - I never would have thought about the difference between getting a large gift in December vs. earlier in the year. One follow-up question on the married couple aspect you mentioned - does this mean that if I'm single and someone wants to give me a really large gift, it might be beneficial for them to be married so they can use both spouses' annual exclusions? Like could a wealthy individual get married partly to double their gift-giving capacity, or does the IRS have rules preventing that kind of arrangement? Also, you mentioned estate planning implications for the recipient - could you elaborate on what kind of estate planning someone should consider after receiving a large gift? I'm assuming it's not just "now you have more money to leave to heirs" but maybe more complex considerations about gift and estate tax interactions?

Great questions! Regarding married couples and gift-giving capacity - yes, being married does effectively double the annual exclusion amounts, but the IRS has "gift-splitting" rules that prevent abuse. Both spouses must consent to split gifts, and they both have to file gift tax returns if the combined gift exceeds one person's annual exclusion. You can't just get married solely for tax avoidance purposes - the IRS looks at the substance of relationships, not just legal arrangements. For estate planning after receiving a large gift, there are several considerations beyond just having more assets: 1. You might now exceed the federal estate tax exemption threshold (currently over $13M), meaning your estate could owe taxes when you die 2. You should consider making your own gifts to family members while you're alive to reduce your taxable estate 3. Life insurance needs might change - you may need less coverage since you have more assets, or more coverage to help heirs pay potential estate taxes 4. Charitable giving strategies become more important and tax-advantageous when you have significant wealth 5. Trust structures might make sense to protect assets and provide tax benefits Basically, receiving a large gift can push you into "high net worth" territory where basic financial planning isn't sufficient anymore. You'd want to work with professionals who specialize in wealth management and estate planning for affluent families.

You're absolutely right that the documentation aspect can make receiving a large gift more complex than you'd initially think! I haven't personally experienced anything quite that dramatic, but I have a friend whose grandmother left her a substantial inheritance that was structured partially as gifts over several years before she passed away. From what she told me, it was definitely more paperwork-intensive than expected. She had to work with both a tax attorney and financial planner to make sure everything was handled correctly. The emotional aspect was challenging too - having to think about tax implications when you're dealing with family generosity felt weird to her. One thing she mentioned that hadn't occurred to me before reading this thread is that large gifts can actually strain relationships in unexpected ways. Other family members sometimes get resentful, or there can be pressure about how you "should" use the money. The tax complexity just adds another layer of stress to what should be a positive situation. I think your point about needing professional help is spot-on. Even though the basic rule is simple (gifts aren't taxable income to recipients), all the peripheral issues - banking, documentation, investment planning, international reporting requirements - make it clear you'd want experts involved. It's probably one of those "good problems to have" but still genuinely complicated to handle properly.

Excellent questions about non-cash gifts! You're absolutely right that the same basic principles apply - no income tax for you, but the giver needs to consider gift tax implications based on fair market value. For valuation, yes, you typically need professional appraisals for significant non-cash gifts. The IRS requires "qualified appraisals" for certain high-value items. For a $500K house, you'd definitely want a professional real estate appraisal. For cars, you might be able to use resources like Kelley Blue Book, but for expensive vehicles an appraisal is safer. Your point about ongoing costs is really important! I've heard of situations where people received valuable property as gifts but couldn't afford the property taxes and maintenance. You might end up having to sell the gift just to cover the costs, which can be emotionally difficult if it's from a family member. And yes, below-market sales are treated as partial gifts! If someone sells you a $500K house for $50K, the IRS would consider the $450K difference a gift. This is called a "bargain sale" and both parties need to be aware of the tax implications. The seller might need to file a gift tax return, and you'd need proper documentation showing the fair market value versus what you paid. These scenarios definitely show why professional help is so valuable - the tax rules get complex quickly when you move beyond simple cash gifts!

This banking perspective is so valuable! I never realized that banks ask about large deposits even below the $10K reporting threshold. That makes me wonder - is there a specific amount where you typically start asking questions, or is it more about deposits that seem unusual for a particular customer's normal pattern? Also, when you mention giving the bank a heads up about an incoming large gift, how far in advance is helpful? Like if someone tells you "I'm expecting a $200K gift deposit next week," what kind of notes would you put on the account to smooth the process? I'm imagining this could save a lot of stress for people who might otherwise have their accounts frozen while the bank investigates. Having worked through this thread and learned about all the documentation requirements, it seems like proactive communication with your bank is just as important as getting the tax side right!

Great questions! The IRS gift tax rules actually apply the same way regardless of the relationship between the giver and recipient. Whether it's family, friends, or even strangers, the same annual exclusion limits ($18,000 for 2025) and lifetime exemption amounts apply. The relationship doesn't change the tax treatment, but it can be relevant for proving intent - like making sure it's truly a gift rather than disguised compensation or a business transaction. You're absolutely right about wanting professional help for large gifts! There are definitely specialists who handle these situations: - Estate planning attorneys who focus on gift and estate tax law - Tax attorneys who specialize in large transactions - CPAs with expertise in high-net-worth clients - Financial planners who work with affluent families Some larger law firms and accounting firms have entire departments dedicated to wealth transfer planning. They can help with everything from structuring the gift properly to preparing all the documentation (gift letters, appraisals for non-cash gifts, etc.) to handling the gift tax return filings. The cost of professional help is usually worth it for large gifts - the penalties for getting gift tax rules wrong can be substantial, and having proper documentation from the start prevents problems later. Plus, they can often suggest strategies to minimize the tax impact for the giver while keeping things simple for the recipient.