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What can I pay of my son's?

My son will be 23 in December. He will have some earned income, but not much. He graduated college in May and will be a graduate student from 6/16 to 8/17.

I know I can pay his tuition, but can I also pay his rent and stuff like that without it being considered a gift? Presumably he will still be a dependent this year and I can pay what I want of his expenses, and still give him a $14,000 gift tax free?

How about next year? He will (hopefully) have more significant income, but I will probably pay more than half of his expenses for the year.

I ran this through the calculator on IRS's website and it says he will be my dependent for both years, but I don't trust the IRS getting anything right.

On a related issue, as I read it, he he pays kiddie tax if he is under 24, so he will have kiddie tax in 2016, but not in 2017. Is that correct?

Thanks much

Reply to
Frustrated
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Just curious why no replies in 3 weeks. Was the question too complicated? Too vague? Too stupid?

Reply to
Frustrated

You're right not to trust them, and by law you cannot normaly rely on what they say that isn't in a revenue ruling or regulation. But as a practical matter if you follow what they say on a website and not just what some random IRS employee tells you, are you probably OK.

It is complex, and in part could be based on state law. What a parent's obligation to his adult children are can vary by state. And that can affect what would be considered support as opposed to a gift.

If this is really a significant issue for you, you should consult a local lawyer who is knowledgeable about both tax and family law.

Reply to
Stuart Bronstein

In 2016, assuming that your son's domicile is still your home, he will be your qualifying child (QC) as long as he is not self-supporting. (QC = Your child under age 24, lives with you for more than 6 months and is a full time student for at least 5 months). For purposes of this test support includes his lodging (rent, utilities, etc.), education, clothing, food, medical, dental, travel, recreation and entertainment.

In 2017, your son will no longer be under age 24 and can not be your QC. Therefore, if his gross income is at least the value of one personal exemption (approx. $4100), he can not be your Qualifying Relative for the dependency test regardless of how much you spend supporting him.

His 2016 unearned income may be subject to your tax rate if his unearned income is more than $2100 and his earned income was not more than half of his total support for the year. In 2017, he would pay tax based on his own rates.

Reply to
Alan

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