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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?
1099-MISC
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Tax Professional Answers

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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 157 weeks ago

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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 157 weeks ago


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