Gifts and deductions

[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.

[ChEAr$]

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.

[Kram BergGold]

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?

[Gene V]

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.