Now that fall is arriving, it’s time for the kids to go back to school. If your grandchildren attend college or private school, your adult children (their parents) may be struggling with ever-rising tuition costs. How can you help?
Strategy: If you can afford it, pay the tuition directly to the schools. Unlike other gifts, this generosity isn’t restricted by the annual gift tax exclusion. The payments are 100% gift tax free.
Even better, you don’t have to wait for the tuition bills to come due. The IRS says you can prepay these amounts—all the way through graduation—without any tax consequences!
Here’s the whole story: Generally, if you pay expenses on behalf of another person, the payment is treated as a gift subject to gift tax. Gift tax is paid by the donor, not the donee. However, you can shield giveaways from gift tax through the annual gift tax exclusion.
The annual gift tax exclusion for 2015 is $14,000 per recipient ...(register to read more)
- Small Business Tax Deduction Strategies No matches