Ask Tax Question

Which is best way or plan for the parents/ grandparents to bequeath some funds from their savings to the grand children immediately?

We are Indian parents of our naturalized American children living in the US and we have 5 grand kids in the age range of 3 to 7. We wish to transfer some funds either to our children or grand kids for their higher education, but it should incur too much income tax to our children.

Which is the best way to go about it?
TaxConnections Members... Answer This Question Want To be One of Our Tax Experts? Register Here

Tax Professional Answers

User Photo
John Stancil
There are no income tax consequences in making a gift to an individual. If the amount of the gift exceeds $14,000 per person per year, a gift tax return must be filed, but there is a $5,430,000 above the annual $14,000 exclusion, so it is likely no gift tax would be incurred. Any gift tax would be paid by you, not the grandchildren. Probably the best avenue is to place the funds in a 529 Qualified Tuition plan. The funds would have to be used for qualified educational expenses or a penalty would be incurred. You would set up a separate plan for each individual. The funds would grow, tax free, and withdrawals for qualified educational expenses would not be subject to income taxes.
Leave a Comment 138 weeks ago

User Photo
Question Owner
Thank you for your quick response. By the way, I meant to say in my question that "it should NOT incur too much tax to our children". What are the taxes our children would have to pay, if we simply transfer say for e.g.US$50,000/- to their account? We are alien non-resident parents.
Reply 138 weeks ago

Meet Leading Tax Advisors

User Photo John Stancil

Lakeland, Florida, USA

Tax Advisor/CEO

User Photo Peter J. Scalise

New York, New York, USA

Federal Tax Credits & Incentives Practice Leader

User Photo John Dundon, II EA

Denver, Colorado, USA

Tax Director

User Photo Steven Potts JD EA IAR

Fullerton, California, USA


User Photo Caran Ebert, CPA

Topanga, California, USA

Tax Advisor

User Photo William Rogers, CFP, MBA, EA

Rancho Santa Fe, California, USA

CEO/Certified Financial Advisor

User Photo Randy Tarpey

Tyrone , Pennsylvania, USA


User Photo Lisa Nason CPA, MST

Greenville, South Carolina, USA

Managing Shareholder

User Photo David Hughey, EA, MAcc

Longview, Washington, USA

Tax Consultant/Tax Advisor


Santa Clara, California, USA

Tax Principal - President

User Photo Bill Robinson, CPA

Chattanooga, Tennessee, USA


User Photo Hugo Van Zyl

Stellenbosch, South Africa

Exchange Control & Master Tax Practitioner (SA)

User Photo Douglas Stransky

Boston, Massachusetts, USA

Tax Partner, International Tax

User Photo Chad Hatalla

Rheinfelden, Switzerland

Senior Tax Manager

User Photo Larry Stolberg, CPA, CA

Toronto Mississauga Oakville Burlington Hamilton, Canada

Tax Specialist

View/Select our Current List of Tax Topics

# A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

Previous PageNext Page

Contact Us Today