Gifting

Submitted by Beverly Fox on Thu, 2019-03-14 13:34

My husband & I have to daughters still in college (19 & 22). We would like to gift each $30K (15K from my husband & 15K myself) under Tax-Free gifts. After the money is transferred to their account, I would like them to move 100% of their 2018 earnings into a ROTH IRA (which is less than max contrib). Can this be done only in current tax year 2019?



Submitted by William Tuttle on Thu, 2019-03-14 15:07

  • If they are eligible for financial aid this would be assessed 50% towards the EFC for the amount > ($12K – their earned income).
  • They are still dependents so any amounts paid or reimbursed for anything that could be considered a support obligation and not a gift. This would include; food, shelter, health and welfare, etc…
  • Notwithstanding the above. You and your wife can each gift $15K to each daughter. There will be no gift tax reporting of if the money comes from personal accounts. If it comes from a joint account you will have to file Form 709 to report gift-splitting.
  • Roth contributions for 2018 can be made until 4/15/19. It might be better if you make the Roth contributions directly to the custodian and reduce any gifts by that a amount. That makes sure the money gets there.

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