Giving son money for graduate school?

[qwerty3656]

In terms of keeping track of/reporting gifts, does it matter whether I give him money, or pay directly to the school for tuition? Do I have to report anything?

 

[street]

Tuition payments made directly to a college are not considered gifts for tax purposes. By paying a school directly, grandparents can potentially move a significant amount from their taxable estate.

There will be some true experts chiming in on this subject. You should be good.

 

[pacergal]

I would pay directly to the school, then you don't need to worry about gift tax.

 

[Eucerin]

In terms of keeping track of/reporting gifts, does it matter whether I give him money, or pay directly to the school for tuition? Do I have to report anything?

This was our question in spring last year. We ended up just pay the tuition directly to school for our daughter's graduate school. Give kids 40k to 50k in a year would consider over gifting. I believe the annual allowable gifting is 16k.

 

[youbet]

In Illinois we can deduct 529b contributions from our state taxes, even if the funds are only in the 529b for a very short time. And you can make 5 years of contributions the first year ($80k) and stay within gift tax rules. What is the situation in Michigan? Depending on Mich rules, you can avoid diminishing your aggregate estate tax deduction and get a state income tax deduction as well.

 

[Bamaman]

When I went to school, we put the tuition on my parents' credit card. They deposited small amounts for living expenses into my checking account, and I worked part time for spending money.

There was no worrying about exceeding any gift tax amounts. The IRS was ignored--as most parents today do for their college students.

I filed my own taxes after I was out of school and had a job--100% on my own.

 

[Time2]

At a certain age or is it deduction status, you can no long take the Credit for college tuition. When this happened, I gifted the money and let the kid get the credit on their taxes.

 

[Car-Guy]

https://www.irs.gov/businesses/smal...oyed/frequently-asked-questions-on-gift-taxes

What can be excluded from gifts


The general rule is that any gift is a taxable gift. However, there are many exceptions to this rule. Generally, the following gifts are not taxable gifts.

1. Gifts that are not more than the annual exclusion for the calendar year.
2. Tuition or medical expenses you pay for someone (the educational and medical exclusions).
3. Gifts to your spouse.
4. Gifts to a political organization for its use.

In addition to this, gifts to qualifying charities are deductible from the value of the gift(s) made.

 

[SecondCor521]

At a certain age or is it deduction status, you can no long take the Credit for college tuition. When this happened, I gifted the money and let the kid get the credit on their taxes.

If you're referring to AOTC or LLC, it's generally income level - they both start to phase out at $80K/$160K AGI single/MFJ. (There are also a lot of other conditions on AOTC, but not too hard to meet those.)

OP's kid would generally not be qualified for AOTC though, because that's generally only for undergrad. The kid might qualify for LLC, though, so OP might consider looking at that. Which is better depends on the specifics of OP's situation and what's most important - paying directly to the school is best for gifting/estate tax reasons; gifting the kid and having the kid pay "OOP" to get LLC might be better from an income tax perspective.