Parents pay for your college-> subject to gift tax?

[JEDI]

if after scharloships and grants, u still have to pay $20k/year for college. you pay 5k and parents agree to pay 15k. whats to prevent the govt from going after the parents for gift tax?

 

[pulse8]

Because it's seen as a way of supporting their child, maybe?

 

[dullard]

Did they pay the money to you and have you turn around and pay the tuition? Or did they simply pay the tuition? Are you a dependent of your parents?

Im not a tax expert. But form 8863 states that if your parents paid your tuition or fees for a qualifed school and if you are a dependent then they will possibly get a huge tax credit. This means they will get lots of money back, this is not something that is supposed to be an extra tax for you or your parents.

 

[jpsj82]

my guess is because the student is a dependent of the parents no tax is needed.

 

[Cerebus451]

<< Because it's seen as a way of supporting their child, maybe? >>



Correct. It's part of the tax deduction they get for declaring you as a dependent. Your parents are not giving the money as a gift, they are giving the money to support their child. My dad put all 5 of us kids through college, no problems from the IRS.

 

[Tsaico]

Well, what will is that you need to receive 20k+ to pay a gift tax. You are allwed to transfer money between family members up to 20k. After that it is considered income/gift and will be tax... (actually the receiving bank will flag it and if you don't pay up you will get a visit from an IRS agent) But if your folks are giving you 15k a year, that won't matter...