If I transfer funds from my parent’s account to my account, do I need to file a gift tax return?

Some people wonder whether a gift tax return is required when funds are transferred between accounts (for example, from parent to child).

In conclusion, a transfer of funds alone will not be recognized as a gift.

This is because the question is what intention or contract was behind the transfer of funds.

For example, even if a deposit is made into an account, there are a variety of reasons for this, such as:

• Deposit from sales of goods or services
• Refund of payment amount
• Deposit of loaned money
• Settlement of advance payment
• Money simply held in trust
• Deposit as a gift

Furthermore, a gift contract is only established with the consent of both parties.

It cannot be established with the will of only one party, the donor or the recipient.

In order to be recognized as a gift, it must be proven that the transfer of funds between accounts was based on the consent of both parties.

When funds are transferred in this way, it is essential to document and clarify the purpose.

-If it is a loan, a contract and repayment record

-If it is a deposit, a memorandum and that the deposited money has not been touched at all

-If it is a gift, a contract and the submission of a tax return (if it exceeds the tax-exempt limit)
(Even if it is a gift, it is tax-exempt if living expenses and educational expenses are paid each time between those with a duty to support, such as a spouse, parents, children, siblings, etc.)

It is necessary to have some proofs of transaction.

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都築太郎税理士事務所/Tsuzuki Taro Tax Accountant Office

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