Paying for College

How to Help Pay a Grandchild's Tuition

Learn what you can pay for and what will get taxed.

I plan to pay my grandson’s college tuition by making payments directly to the university. Are these payments subject to limits or gift taxes? - R.V., Waco, Texas

Ordinarily, you’d need to file a gift-tax return if you were to give more than $15,000 in 2018 to any individual (couples may give up to $30,000), but any money you pay directly to the college for your grandson’s tuition isn’t subject to those limits. (Money that goes toward room and board is subject to the limits, however.)

You can also transfer money out of your estate by contributing up to five times the gift-tax limit to a 529 college-savings plan in one year (for a total of $75,000 in 2018) without suffering any gift-tax consequences. (You won’t be able to give your grandson any more money for five years.) Distributions from a grandparent-owned 529, though, could reduce the amount of your grandson’s financial aid award.

Most Popular

Your Guide to Roth Conversions
Special Report
Tax Breaks

Your Guide to Roth Conversions

A Kiplinger Special Report
February 25, 2021
The 12 Best Tech Stocks to Buy for 2022
tech stocks

The 12 Best Tech Stocks to Buy for 2022

The best tech-sector picks for the year to come include plays on some of the most exciting emergent technologies, as well as several old-guard mega-ca…
January 3, 2022
How to Know When You Can Retire
retirement

How to Know When You Can Retire

You’ve scrimped and saved, but are you really ready to retire? Here are some helpful calculations that could help you decide whether you can actually …
January 5, 2022

Recommended

Biden Extends Suspension of Student Loan Payments
loans

Biden Extends Suspension of Student Loan Payments

The president gave borrowers another 90 days until May 1 before they have to start paying back their student loans.
December 22, 2021
The Return of Student Loan Payments
Paying for College

The Return of Student Loan Payments

A pandemic reprieve on student loan payments ends in January. If you still need financial help, there are steps you can take.
November 22, 2021
How to Balance Saving for Retirement and Your Kids’ Education
college

How to Balance Saving for Retirement and Your Kids’ Education

Achieving your goals takes patience and time – but starting early will give you a big edge. And while it may feel unnatural, put yourself (and your re…
October 29, 2021
Thoughts Before Funding a 529 College Savings Plan
college

Thoughts Before Funding a 529 College Savings Plan

Watching your college savings grow tax-free with a 529 college savings plan feels great, but failing to follow the rules could come with penalties and…
October 23, 2021