2011 Limit on Tax Free Gifts

Is your son still your dependent? If so, support moneys are not taxable gifts.

If not your dependent, you can gift up to 13,000 per year to anyone before having to declare that amount on a gift tax return.

A husband and wife can each gift 13,000 for a total of 26,000 before they have to report, unless one spouse gifts nore than 13,000 and the other spouse agrees to split the gift, and declares the intent to gift split by filing form 709.

Until you use up your lifetime gift exclusion amount, you will not actually pay gift tax but will use up your unified gift/estate tax exclusion amount whenever you report gifts over the annual exclusion amount.

see above

Structured right, a total of 4 x 13,000 before having to file.

Repayment of such a loan is just like any other gift. But paying qualified educational expenses directly to a qualified educational instituion does not affect the gift limitations. It is not considered to be a gift.

snipped-for-privacy@panix.com (Arthur Kamlet) wrote in news:ir6c0g$fgq$2 @reader1.panix.com:

Does this mean that grandparents can pay "qualified educational expenses directly to a qualified educational instituion" without gift tax ramifications? Such as "qualified educational expenses" directly to an institution like Columbia University? If so, maybe I should invest my "yearly gifts" to my grandkids in my own name, for later use.

Thank you very much .. that is exactly what I was looking for.

Right. If the couple makes gifts amounting to $26,000 to any individual and it doesn't come equally from each spouse, it is still exempt from gift tax, but gift tax return must be filed and the couple choose gift splitting.

Generally if you don't live in a community property state, I'd think filing the return and doing a gift split would be the safest thing.

Why is gift splitting (the need to file form 709) when the couple gives $26,000 not required in a community property state?

Also, could the couple give separate checks of $13,000 drawn from separate accounts?

In addition, are you a US citizen or a resident? Typically a non- citizen does not pay any gift tax, and the receiver has to merely report the gift if it in excess of $100,000.

What about payments made directly to medical institutions?

In a community property state if it comes in one lump sum, it is generally presumed to come half from each spouse.

Yes, and in that case no gift splitting will be necessary, either, assuming each spouse is the owner of the money he makes his gift out of.

No one asked so I didn't bring it up, but, yes, payments you make directly to a medical provider on someone else's behalf are not taxable gifts.

Then perhaps the easiest thing to do is open two new bank accounts separately owned. Fund each account with $13,000 from the original joint account. Then give separate gifts. The advantage here, if this strategy works, is that there is no need to file form 709. Getting a professional to do it could cost $100 or more. Doing it yourself might work too. But it's possible that the government could deem the two chunks of $13,000 as really joint because it was contraption devised to circumvent the laws, and they can use the substance over form argument.

Since spouses can give each other gifts without limit and without having to file a think, I doubt that would be a problem. Besides, aside from notification, filing a 709 to elect gift splitting has little real effect.