Do You Pay Taxes On A Gifted Car In Missouri?

Are you thinking of gifting or receiving a car in Missouri? If so, you may be wondering if you have to pay taxes on the gifted vehicle. The answer is not straightforward and depends on several factors such as the relationship between the giver and the receiver, the value of the car, and the purpose of the gift. In this article, we will explore the rules and regulations regarding gifted cars in Missouri and help you understand if you need to pay taxes on your new ride. So, let’s dive in and clear the confusion around this topic.

Do You Pay Taxes on a Gifted Car in Missouri?

If you are a Missourian and someone gifts you a car, you may be wondering if you need to pay taxes on the vehicle. The answer is yes, you do need to pay taxes on a gifted car in Missouri. However, the amount you need to pay is based on the vehicle’s value and other factors. In this article, we will guide you on how to calculate the tax amount and other important information that you need to know.

How to Calculate Tax on a Gifted Car in Missouri?

In Missouri, there are two types of taxes you need to pay when you receive a gifted car. These include the state sales tax and the local use tax. The state sales tax is 4.225% of the car’s fair market value. This value is determined by the Department of Revenue, and it is based on the car’s make, model, and year. In addition, the local use tax is also applied, and it varies depending on the county where you live.

For instance, let’s assume that the fair market value of the gifted car is $10,000, and the local use tax rate in your county is 2%. You will need to pay $422.50 as state sales tax and $200 as local use tax. Therefore, the total tax amount you need to pay is $622.50.

When Do You Need to Pay the Taxes?

You need to pay the taxes within 30 days of receiving the gifted car. If you fail to pay the taxes within this period, you may be charged penalties and interest. In addition, if you plan to register the car, you need to provide proof of payment of taxes.

What Documents Do You Need to Provide?

To pay the taxes on a gifted car in Missouri, you need to provide the following documents:

• A signed affidavit of gift
• The car’s title
• A bill of sale or a statement of value from the gift giver
• Proof of insurance

What Are the Benefits of Gifting a Car in Missouri?

Gifting a car in Missouri can be beneficial for both the giver and receiver. For the giver, it is a way to transfer ownership of the car without selling it. This means they don’t have to worry about the hassle of selling the car, and they can also save money on taxes. For the receiver, it is a great way to get a car without having to pay the full price. However, it is important to remember that you will still need to pay taxes on the gifted car.

Gifted Car vs. Inherited Car

There is a difference between a gifted car and an inherited car. When you inherit a car, you don’t need to pay taxes on it in Missouri. However, you will need to provide the following documents:

• A copy of the death certificate of the previous owner
• The car’s title
• Proof of insurance

Conclusion

In summary, if you receive a gifted car in Missouri, you need to pay taxes on it. The tax amount you need to pay is based on the car’s fair market value and the local use tax rate in your county. You need to pay the taxes within 30 days of receiving the car and provide the necessary documents to the Department of Revenue. However, gifting a car in Missouri can still be beneficial for both parties involved.

Frequently Asked Questions

Do You Pay Taxes on a Gifted Car in Missouri?

Yes, you may have to pay taxes on a gifted car in Missouri. The amount of tax you will owe depends on the fair market value of the car. If the value of the car is less than $8,000, you will not have to pay any taxes. If the value of the car is between $8,001 and $15,000, you will have to pay a tax of 4% of the fair market value. If the value of the car is $15,001 or more, you will have to pay a tax of 4.225% of the fair market value.

It is important to note that the person giving the car as a gift is responsible for paying the taxes, not the person receiving the gift. The person giving the car will need to provide proof of the fair market value of the car to the Missouri Department of Revenue when they file their taxes.

What Is Considered a Gifted Car in Missouri?

A gifted car in Missouri is a car that is given to someone without any exchange of money or other items of value. This can include cars given as gifts between family members, friends, or even employers and employees. It is important to note that a car given as a gift must be given freely, without any obligation or expectation of repayment.

If a car is sold for a price that is significantly lower than its fair market value, it may be considered a gift and subject to Missouri’s gift tax laws. The Missouri Department of Revenue will examine the circumstances surrounding the sale to determine if it is a gift or a sale.

Do You Have to Transfer the Title of a Gifted Car in Missouri?

Yes, you are required to transfer the title of a gifted car in Missouri. The process for transferring the title of a gifted car is the same as transferring the title of any other car. The person giving the car must sign the title over to the person receiving the gift. The person receiving the gift must then take the title to the Missouri Department of Revenue to have it transferred into their name.

It is important to note that if the car is being gifted to a family member, the transfer of the title may be exempt from the state’s sales tax. However, the person receiving the gift will still be responsible for paying any applicable gift taxes.

What Documents Do You Need to Transfer the Title of a Gifted Car in Missouri?

To transfer the title of a gifted car in Missouri, you will need the original title of the car, a completed Application for Missouri Title and License (Form 108), and a Bill of Sale, which should include the fair market value of the car. You will also need to provide proof of insurance and pay any applicable fees and taxes.

If the car is being gifted to a family member, you will need to provide proof of the relationship, such as a birth certificate or marriage license. If the gift is being made by an employer to an employee, you will need to provide proof of employment, such as a pay stub or W-2 form.

Can You Transfer the Registration of a Gifted Car in Missouri?

Yes, you can transfer the registration of a gifted car in Missouri. The process for transferring the registration of a gifted car is the same as transferring the registration of any other car. The person receiving the gift will need to provide proof of insurance and pay any applicable registration fees.

It is important to note that if the car is being gifted to a family member, the transfer of the registration may be exempt from the state’s registration fees. However, the person receiving the gift will still be responsible for paying any applicable gift taxes.

Gift a vehicle without paying sales tax – Gift Tax $10 – Form 14-317 – Save Tax Money

In conclusion, receiving a gifted car in Missouri is a generous act that comes with certain tax considerations. While you don’t have to pay taxes on the car as a recipient, the person who gifted you the car may have to pay gift taxes if the car’s value exceeds the IRS’s annual exclusion limit. It’s important to understand the tax implications of receiving a gifted car and seek professional advice to ensure compliance with the state’s laws and regulations.

However, if the car is gifted to you as part of an inheritance, different tax rules may apply. In this case, the estate may have to pay estate taxes if its value exceeds the federal estate tax exemption limit. It’s important to consult a tax professional to understand the specific tax implications of your situation.

Overall, whether you’re gifting a car or receiving one as a gift in Missouri, understanding the tax implications is crucial to avoid any surprises down the line. By seeking professional advice and staying informed, you can ensure a smooth and hassle-free process of gifting or receiving a car in the state.