Support vs. Gift: college student & annual gift limit

Parents Forum
1

I have not really come up with a clear answer from googling, so I’m hoping someone here can help me.

Basic question: What is included for the annual gift maximum (currently $15,000/$30,000 for both spouses) with your college student?

Details: Our son is finishing his last semester of undergrad with a full tuition scholarship. We pay all of his other expenses including food and rent. We want to gift him a car this year. He will be going to grad school in the fall, and we would like to gift him money to help him buy a small house. He is currently 20 years old. With his grad school stipend starting in the fall, I think it would be a wash as to whether he is dependent or independent for tax purposes for 2018.

Do the room & board and other living expenses we pay while he is finishing undergrad this semester count towards the $15k/30k? Does gifting him the car prior to him graduating in May make a difference as to whether or not its value counts? Does the above matter, for gift purposes, if he remains a dependent for 2018?

2

Does it matter? If you exceed the $30k limit, you fill out the tax form and report it toward your lifetime limit, which is in the millions.

I think if he is a dependent this year, the support is not a gift (room, board, living expenses).

3

I know we can go over $30k and fill out a form, but we’re trying to avoid that hassle.

It also seems reasonable to me that room, board, living expenses as a dependent should be considered support. I’m just not confident that the IRS sees it that way.

4

The form takes less than 10 minutes to fill out. Maybe 8, and you don’t need to have a CPA to fill it out correctly.

And the IRS does not consider room and board a gift.

5

Supporting your dependent undergrad is not a gift. btw- for those rich enough and wanting to give money to relatives- paying the tuition directly to the school is not a gift either. OP has tuition covered.

Sounds wise to get the car while he is still your dependent.

When son graduated from college and had his first job he needed a car. It was a holiday weekend when H and he got the car and H paid for it because son couldn’t get the loan since he couldn’t get the letter from his new job to get the low interest rates offered to new grads. He was leaving us and so couldn’t/didn’t want to wait for paperwork as well. H’s name was required to be on the title since he paid for the car- therefore no gift and avoided gift issues.

6

Why buy a house when he is going to be in grad school, who knows where his future first job is going to be?

Or is he going into a PHD program?

7

Yes - he is going into a PhD program. We’d rather buy something small than rent for 5+ years.

As for titling the car, it is one we currently own. So it might make more sense just to keep it in our name this calendar year, then officially give to him in 2019.

8

What kind of used car is going to push you over the 30K gift limit???

9

It’s the car plus the cash gifting to help purchase a house. And, I wasn’t sure if we had to include the rent and financial support for this final semester of undergrad.

10

It would seem to me that the cost of college is simply considered support for the child and is not a gift. I have never heard of anyone filling out gift tax returns for college expenses.

11

It would seem to me that the cost of college is simply considered support for the child and is not a gift. I have never heard of anyone filling out gift tax returns for college expenses.

12

Is he going to remain a dependent for 2018? Is he going to have summer earnings before starting the PhD program? My daughter is a senior this year, and is likely to have 7 months (June-Dec) of independence, so I will not claim her as a dependent for 2018. The tax year doesn’t match the school year, and that’s always been an issue for parents to determine.