Gifts and deductions

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  • Kram BergGold
    Senior Member
    • Jun 2006
    • 2112

    #1

    Gifts and deductions

    1. If Grandma pays for Granchild's tuition we all know the kid or the parent gets to use the payment for figuring the tuition credit.

    2. Grandma gives child $13,000. Child spends this money on various deductible items. All are deductible.

    3. If Grandma pays a dentist bill for her child does the child get to claim the medical deduction? If not, why is this different from #1.

    4. If grandma pays pays child care provider can the parent claim a child care credit? If not why?

    5. Grandma wrties a check to pay her child's real estate taxes (Grandma's name is not on the house). Does the child get to deduct them? If not why?


    I saw a court case about this kind of thing and a recent post on this board and it got me to thinking.
  • ChEAr$
    Senior Member
    • Dec 2005
    • 3872

    #2
    Originally posted by Kram BergGold
    1. If Grandma pays for Granchild's tuition we all know the kid or the parent gets to use the payment for figuring the tuition credit.

    2. Grandma gives child $13,000. Child spends this money on various deductible items. All are deductible.

    3. If Grandma pays a dentist bill for her child does the child get to claim the medical deduction? If not, why is this different from #1.

    4. If grandma pays pays child care provider can the parent claim a child care credit? If not why?

    5. Grandma wrties a check to pay her child's real estate taxes (Grandma's name is not on the house). Does the child get to deduct them? If not why?


    I saw a court case about this kind of thing and a recent post on this board and it got me to thinking.
    I say 'no' to 3, 4 and 5, simply because of the form of the transaction.
    The way to get a deduction for anybody is for grandma to give the equivalent money
    to the person obligated to pay.

    As fr # 5, the deductor (?) must be both the one obligated and who actually pays.
    ChEAr$,
    Harlan Lunsford, EA n LA

    Comment

    • Kram BergGold
      Senior Member
      • Jun 2006
      • 2112

      #3
      Clarification

      My point is, if Grandma pays a bill for a child, this is still a gift and depending on the amount and type, a gift tax return might be required. So why is it different if Grandma makes a cash gift to the child or pays a bill for the child?

      Comment

      • Gene V
        Senior Member
        • Jun 2005
        • 1057

        #4
        Originally posted by Kram BergGold
        My point is, if Grandma pays a bill for a child, this is still a gift and depending on the amount and type, a gift tax return might be required. So why is it different if Grandma makes a cash gift to the child or pays a bill for the child?

        The exception for Gift tax--- from Pub. 950

        Tuition or medical expenses you pay directly to a
        medical or educational institution for someone.

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