Gifting Strategy #2

Another way that a taxpayer can avoid dealing with gift tax returns is to pay an individual’s tuition or medical costs directly. As long as the payments are made to the institution directly, they can reduce your estate and won’t count against the $14000 maximum allowed to gift to an individual each year.

So effectively, you could gift $14000 to your grandson AND make a payment toward his college tuition as long as you make the tuition pay directly to the college and NOT to your grandson.

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