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Established Contributor
cashnocredit
Posts: 1,012
Registered: ‎07-18-2009
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Re: American Express FR

[ Edited ]

ryanbush wrote:

what is the gift limit?


There is no gift limit for the recipient nor are gifts recieved reported on 1040's. Gifts, if large enough, may have to reported by the giver to and possibly taxable by the IRS.

 

With gifts, the giver is the one that has to, if large enough, report and pay taxes, not the giftee.

I have reestablished credit over the last couple years
so my moniker is, well, rather out of date.

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Autumnslight
Posts: 311
Registered: ‎07-08-2012
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Re: American Express FR


webhopper wrote:
Investment income should have a capital gains tax on the income earned from the investment, right?

Not necessarily. Municipal bond income is entirely exempt from Federal income tax. Interest and dividend income is generally taxed as ordinary income, except for qualified dividends, which are taxed like capital gains. 

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Established Member
jhr4
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Registered: ‎09-20-2012
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Re: American Express FR

I am glad people are discussing what types of income can be used for AMEX. I am planning on app'ing in November and have been confused about what to put down.

 

I know that investment income can be included as stated on its application. However the investment income on my 1040 is usually a tiny fraction of what I actually receive. When the company I worked for was bought out 3 years ago, I put a lot of the cash and stock I received into a trust for tax purposes. Many of my investments that issue dividends and interest are not taxable (MLPs and municipal bonds). Even if I receive $50k in distributions from the trust in a year, I might only claim $3k in dividend income because of how investments are structured or because trust pays the taxes.

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cashnocredit
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Re: American Express FR


jhr4 wrote:

I am glad people are discussing what types of income can be used for AMEX. I am planning on app'ing in November and have been confused about what to put down.

 

I know that investment income can be included as stated on its application. However the investment income on my 1040 is usually a tiny fraction of what I actually receive. When the company I worked for was bought out 3 years ago, I put a lot of the cash and stock I received into a trust for tax purposes. Many of my investments that issue dividends and interest are not taxable (MLPs and municipal bonds). Even if I receive $50k in distributions from the trust in a year, I might only claim $3k in dividend income because of how investments are structured or because trust pays the taxes.


One of the advantages for Amex pulling IRS files directly is that it is really rare for people to overstate their income to the IRS. With all it's flaws, it's probably more accurate than the "income" put on an app. At least when people are in their working years and out of school long enough to have filed for a full year's employment.

 

It becomes more of an issue for retired folks. These days pensions are nearly extinct. Some have 401ks, most have social security, but surveys show way too few of us newly retired have saved what we should have.  OTOH, most retired people with or without significant savings or assets have pretty good credit scores.

 

Unfortunately, good credit is no substitute for retirement income and the boomers are just starting to move into the retirement years. There will clearly have to be more attention paid to assets and not just income. Depending on the nature of the income, it could greatly understate or overstate its effective equivalent in regular earned income. CC issuers will have to find ways to address this without targeting retired people specifically as they are a protected class.

 

 

I have reestablished credit over the last couple years
so my moniker is, well, rather out of date.

WM Discover $1800, WF Plat 12k, Chase Freedom Siggy15k, Amex Plat (60k H/B), Citi AA EWMC 25k
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Revelate
Posts: 8,893
Registered: ‎12-30-2011
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Re: American Express FR

[ Edited ]

cashnocredit wrote:

ryanbush wrote:

what is the gift limit?


There is no gift limit for the recipient nor are gifts recieved reported on 1040's. Gifts, if large enough, may have to reported by the giver to and possibly taxable by the IRS.

 

With gifts, the giver is the one that has to, if large enough, report and pay taxes, not the giftee.


AFAIK the annual exclusion for this year is 13K.

 

Anything larger than that is typically better structured as a multi-year family loan up to something like 100K, and then simply forgive the loan at the gift annual exclusion per year.  There's some restrictions and caveats on this though, and I ain't a financial advisor so YMMV.

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distantarray
Posts: 2,112
Registered: ‎09-25-2011
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Re: American Express FR

[ Edited ]

cashnocredit wrote:

 really rare for people to overstate their income to the IRS. 

 


It's really easy with turbo tax free online version, but you'll just have to pay the taxes on it, I know cause I screwed up my taxes for a mortgage putting extra income in the wrong place. I didn't know where to put them lol anyways even mortgage lenders accepted it as is so I was happy.


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Established Contributor
cashnocredit
Posts: 1,012
Registered: ‎07-18-2009
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Re: American Express FR


Revelate wrote:

cashnocredit wrote:

ryanbush wrote:

what is the gift limit?


There is no gift limit for the recipient nor are gifts recieved reported on 1040's. Gifts, if large enough, may have to reported by the giver to and possibly taxable by the IRS.

 

With gifts, the giver is the one that has to, if large enough, report and pay taxes, not the giftee.


AFAIK the annual exclusion for this year is 13K.

 

Anything larger than that is typically better structured as a multi-year family loan up to something like 100K, and then simply forgive the loan at the gift annual exclusion per year.  There's some restrictions and caveats on this though, and I ain't a financial advisor so YMMV.


Yep. 13k is the exclusion/report limit. There's actually a lot of folks that are making big donations before 12/31. The lifetime deductable on gifts is slashed at the end of the year.

I have reestablished credit over the last couple years
so my moniker is, well, rather out of date.

WM Discover $1800, WF Plat 12k, Chase Freedom Siggy15k, Amex Plat (60k H/B), Citi AA EWMC 25k
Established Contributor
cashnocredit
Posts: 1,012
Registered: ‎07-18-2009
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Re: American Express FR


distantarray wrote:

cashnocredit wrote:

 really rare for people to overstate their income to the IRS. 

 


It's really easy with turbo tax free online version, but you'll just have to pay the taxes on it, I know cause I screwed up my taxes for a mortgage putting extra income in the wrong place. I didn't know where to put them lol anyways even mortgage lenders accepted it as is so I was happy.


Never used the online version. I have used TT desktop as well as just done it manually. The thing I like about TT is that you can try a bunch of "what ifs" to look at the different affects of taking expenses or unrealized cap gains in one year v another.  Helps build intuition on what the tax impact is of various decisions. Useful.

 

I have reestablished credit over the last couple years
so my moniker is, well, rather out of date.

WM Discover $1800, WF Plat 12k, Chase Freedom Siggy15k, Amex Plat (60k H/B), Citi AA EWMC 25k
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CreditCrusader
Posts: 799
Registered: ‎09-27-2011
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Re: American Express FR


youngandcreditwrthy wrote:
I think allowances can be considered income, just not student loans. I always include my mom's income in my hhi, but that's because she has actually helped me pay my credit card bills in the past when Ive been in a bind. I'm also 23 with a great job and a full time student and have paid most of my own bills since I've been 20 or so. But if your only source of income is your parents, that seems a little unstable to a creditor, I'm sure. Plus Amex is just not the type of creditor that hands cards out to 18 year olds. I've had to build my credit for FIVE YEARS to get my Amex BCE!!! Lol We can fight all day long about gov't and regulation, bit as many ops post, Amex is acting reasonably due to requirements by the CARD Act (I think). And for the better, you should be willing to show proof of income if you want a credit card; it is a loan afterall...similar to any car or home loan, although not secured. Sorry for the rant... Hope everyone is doing wellll :-)


Wow...you should really reconsider what you're doing with these applications. I am not aware of any creditor or provision in the CARD act that allows someone to include his parent's income on a credit application. If you have a great job, why pad your number with income that isn't yours? It just seems as though you are playing with fire just to skip a step of the credit process that requires sufficient individual income to attain premier credit products. If you don't get FR'd, you've gotten away with it. If not, you could lose your card and set yourself up for endless FR activity should you score an AMEX or other prime card down the road.

 

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Established Contributor
shakalaka
Posts: 556
Registered: ‎09-10-2012
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Re: American Express FR

I thought one should no longer give the HHI but the personal gross income?


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