are college expenses subject to the gift tax
Actual reasonable expenses will be reimbursed subject to the limits set forth in these guidelines (see reimbursement procedure below). The College does not provide reimbursement for personal expenses incurred while on official College business. 529 college savings plans (529 plans) are one of three types of qualified education benefits, the other types being prepaid tuition plans and Coverdell education savings accounts. Distributions from a 529 college savings plan are tax-free if used to pay for qualified education expenses subject to certain additional restrictions. Tax-Free Gifts Of Prepaid Tuition. With college tuition approaching $30,000 a year at some institutions, and private school tuition at all levels on the rise, tax-free tuition gifts to children and grandchildren can save hundreds of thousands in gift and generation skipping taxes. Tax Exemption. Hamilton College is a 501(c)(3) tax exempt organization and is exempt from all sales tax in the state of New York, Connecticut, Florida, Maine, Massachusetts (tangible personal property only), Missouri and New Jersey. This exemption applies to hotels/motels, restaurants, rental cars and retail purchases. This trend is expected to accelerate as baby boomer grandparents start gifting what could be trillions of dollars over the next few decades. Helping to finance a grandchild's college education can bring great personal satisfaction and can be a way for grandparents to minimize potential gift and estate taxes. Internal Code Section 2503(e) (2)(A) excludes from gift tax any amount paid on behalf of an individual as tuition at an educational organization described in Section 170(b)(1)(A)(ii). Such gifts are not, under Section 2611(b)(1), subject to generation-skipping transfer tax (GST tax). Business Expense Reimbursement Guidelines. Employees at Hamilton have a fiduciary responsibility to use tuition, gifts to the College, and other sources of revenue wisely and carefully in furtherance of Hamilton’s educational mission. However, contributions to a 529 college savings plan may be subject to gift taxes. Generally, people can contribute up to the annual gift tax exclusion ($14,000 in 2013, 2014 and 2015) to each beneficiary’s 529 plan, twice that for a married couple, without incurring gift taxes. Pay tuition directly to the college. If you are considering making an outright cash gift, another option is to bypass your grandchild and pay the college directly. Under federal law, tuition payments made directly to a college aren't considered taxable gifts, no matter how large the payment. To minimize any potential gift tax implications, you'll want to keep your gift under the annual federal gift tax exclusion amount—$13,000 for individual gifts or $26,000 for joint gifts made by both grandparents.
No, tuition payments made directly to a college aren't considered taxable gifts.