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Q. Can my best friend give my son a gift of $10000 a year and result in no tax consequences to my son?
>>>>IR$Maven's reply:
Any taxpayer/person can gift $10,000 annually to any other person(s), and the gift is TAX-FREE. Married taxpayers can gift $20,000 annually to any other person. If your best friend is not taking a tax deduction for the $10,000 paid,(such as paying your son for work performed), then the payment is a gift by him and is NOT taxable income to the recipient, your son. However, if the payment, or any part of it, is taken as a tax deduction, then that part IS taxable income to your son. If the gift exceeds $10,000 annually, only the donor is responsible for filing a gift tax return and paying any tax due.
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