Hahn1040 Posted June 3, 2022 Report Posted June 3, 2022 My client contributed $20,000 each to her two son's 529 plans. They are ages 12 and 17. Dad is deceased. I explained that we need to file a Gift Tax return and so i need the total of all gifts made during the year. I feel that it is a gray area of what is a gift vs. support for dependents. Certainly, if you give your 26 year old son a car, it is a gift. But when you give your 16 year old dependent a car is it support or a gift? Does anyone have a source that addresses this issue? Thank you for your help Quote
Sara EA Posted June 4, 2022 Report Posted June 4, 2022 Yes, she has to file a gift tax return. No consequence unless she's already gifted her $12M lifetime exemption. She can spread the gift over five years, but no point in that since there won't be any tax. I don't think a 16 year old can legally own a car, so it would be in your name anyway. Quote
kathyc2 Posted June 4, 2022 Report Posted June 4, 2022 Are the kids receiving SS benefits for deceased father? See if you can justify that this money if part of the 20K. Quote
jklcpa Posted June 4, 2022 Report Posted June 4, 2022 18 hours ago, Hahn1040 said: I feel that it is a gray area of what is a gift vs. support for dependents. Certainly, if you give your 26 year old son a car, it is a gift. But when you give your 16 year old dependent a car is it support or a gift? For support for minors, there is an obligation to provide shelter and its related costs, food (whether at home or providing an allowance for meals outside of the home, clothing, health care costs, possibly some nominal allowance to meet those needs not provided at home. I'd include travel costs to school (but not for vacations/parties), so that part of operating the vehicle and its related costs could be included in support. I would also include cost of a laptop/computer and internet access in support at this point too. Clearly, if the parents purchase a car for a 26 year old titled in the child's name, that is a completely different scenario. Gifts would be contributions to UTMA, 529, IRAs; larger amounts not for support; a car; other expensive gifts not required for their health/well being. Also, this is an older article on the subject of dependency of college students but still worth the read: https://www.thetaxadviser.com/issues/2010/aug/nichols-aug-2010.html 1 Quote
Hahn1040 Posted June 4, 2022 Author Report Posted June 4, 2022 yes they do receive Soc Sec. ... so if she used $5,000 of their own money, then that part would not be a gift. very good idea. Quote
Hahn1040 Posted June 4, 2022 Author Report Posted June 4, 2022 Judy, Thank you for the input and the article. that is a great help! Quote
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