Advertisement
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.)

Advertisement - Article continues below

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.

Advertisement

Most Popular

What Are the Income Tax Brackets for 2020 vs. 2019?
tax brackets

What Are the Income Tax Brackets for 2020 vs. 2019?

The IRS unveiled the 2020 tax brackets, and it's never too early to start planning to minimize your future tax bill.
June 20, 2020
HSAs Get Even Better
Financial Planning

HSAs Get Even Better

Workers have more options with flexible spending accounts, too.
July 2, 2020
17 States That Will Gain or Lose Electoral-College Votes After the 2020 Census
Politics

17 States That Will Gain or Lose Electoral-College Votes After the 2020 Census

Every 10 years, the 435 seats in the House of Representatives are reassigned based on the results of the U.S.
July 2, 2020

Recommended

7 Ways the Pandemic Will Change College Forever
college

7 Ways the Pandemic Will Change College Forever

Colleges and universities face steep budget cuts, enrollment challenges and new types of competition as a result of COVID-19. We cover the changes you…
June 19, 2020
How to Fund a Memorial Scholarship to Honor a Veteran
college

How to Fund a Memorial Scholarship to Honor a Veteran

With the help of a college or community foundation, you can establish a scholarship in the name of a loved one to help students in perpetuity.
May 24, 2020
How to Endow a Scholarship to Honor a Veteran
college

How to Endow a Scholarship to Honor a Veteran

You may be able to set up a scholarship fund through a college or community foundation, or support educational programs through a charity that special…
May 24, 2020
Gifts for Grads to Build Good Money Habits
college

Gifts for Grads to Build Good Money Habits

Today’s graduates aren’t destined to share the same fate as past generations, so it’s important for them to ramp up their money skills.
May 13, 2020