Failure to file gift tax return

I haven't checked whether you may use gift-splitting on a late return. There may be other elections which can only be made on a timely return.

According to my notes, the only other disadvantages are that the statute of limitations doesn't start to run until the return is filed, and some indirect GST (generation skipping tax) calculations on gifts of assets have to use the value when the return is filed.

-- Arthur L. Rubin, Brea, CA

I need info on this same subject. I have a married daughter going to Dental College. We are paying for her tuition and a small stipend. My understanding is my wife and I could gift my daughter and her husband $56,000 in one year. If that is correct? Does that money need to be labeled in any particular way, or can we just write a check from my wife and my checking account to my daughter for her to deposit into their account? We have gifted her money for the first term that started in July, next payment is in January, so in 2018 we are up to $38,000 and will gift her $18,000 more to get up to $56,000. She can hold that $18,000 and then I can gift another $56,000 in Jan 2019 that should cover all

2019 tuition. However in 2020, tuition is $70,000 and I can only gift $56,000 what do I need to do to gift more? We are well under $5,000,000 in assets, however, if my wife lives another 30 years, that could change, but I also would think the $5M number would go up. Also if I pay the tuition direct to the college, is it still a gift to my daughter that needs proper treatment? Mikek

$60,000 in 2018.

If you make the gift from a joint account in the names of you and your spouse you can avoid having to file a gift tax return if you limit your annual gift to any one individual to no more than $30,000. I.e., you give your daughter $30,000 max during the year and give your son-in-law $30,000 max during the year. Please note that if you write a check from your joint account for $30,000 and then give your daughter other presents (e.g., birthday gift or Xmas gift, etc.), you will exceed the annual limitation and have to file a gift tax return.

$11,180,000 not $5M.

Any payment made directly to the college for tuition does not count against your annual or lifetime limitation. The same is true for any medical expense you pay directly for her. Medical expense has the same definition as used for taking a medical deduction on Form 1040 Schedule A.

For now. It's currently scheduled to go back to half whatever the inflation adjusted amount is at the end of ten years.

could very likely go down, you never know.

Is this true if paid for anybody, not just a relative or dependent?

Yes. A word of caution: For gift tax purposes it is only tuition that qualifies for the exclusion. Additionally, the exclusion is not limited to colleges. It includes any educational organization that normally maintains a regular faculty,curriculum and has a regularly enrolled body of students in attendance physically where the educational activities are carried on. Presentation of formal instruction must be the primary function of the organization.

I also found a notation in my folder on this subject that says to check whether certain medical expenses normally deductible on Schedule A qualify for the gift tax exclusion when paid directly. 3 items are listed: Lodging, transport, and longterm care. I do not know why I made the notation. So... caution should be exercised unless someone reading this knows whether those expenses qualify.

At this point all I expect to pay for is tuition and tools, $9,800 worth of dental tools this term! I want to gift her as much as I can, because she can take the tuition credits where I no longer can. Then pay direct what ever is more than the gift limit. I'm from a lower middle class background, I guess I'm Lucky-- to have these problems :-/

One aspect of doing this is the tuition gift can negatively impact the student's financial aid, if they are receiving any. Something to check.

Steve

Would making it a loan (which can be forgiven after graduation) pose the same problem?

That could be a helpful option for some of the money. Any tax advice about that?