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Member
Group: Forum Members
Last Login: 7/15/2009 8:12:26 AM
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| When is the line crossed from providing education expenses for your dependent, and when payment of education expenses becomes a taxable gift? Once the education expense becomes optional? I understand there is an unlimited education expense exemption for amounts given directly to the institution, however, in my reading it only covers tuition and not living expenses, books or supplies? I always assumed while the kid was away to college, any expense provided was just normal support for my dependent. However, when is this no longer the case? The code states the exemption is there, no matter the relationship of the donor and donee. But say my child is now age 30 and married and out of the house, and is going back to school, and I pay for all expenses; is only the tuition (if paid directly to the institution) exempt, and any other expenses paid for are gifts? What if my child is at home, but is a professional student, and at age 30 still going to school. Still support, or a gift? Or is everyone making gifts when they pay for college, but just ignoring it? Please provide input. Thank you.
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Power Member
Group: Forum Members
Last Login: 1/6/2010 6:00:00 PM
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To better understand the tax issues, first look to state law regarding a parent's obligation of support. Start with Family Code Section 3900.
John Jacobson
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Member
Group: Forum Members
Last Login: 12/1/2009 12:47:02 PM
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great question...
kind of like situations where parents live with their adult children... probably taxable gift.
an adult child in college is often receiving gifts- and where there is only one parent those gifts can become taxable fairly easily.
IRS Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing or recommending to another party any matters addressed herein. |
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thank you. sounds like if it is not required as legal support, it will be a gift, unless falls under the education exclusion.
thanks
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