TaxConnections

Login | TAXPAYERS | TAX PROFESSIONALS-START HERE

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
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 170 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 170 weeks ago

Meet Leading Tax Advisors

User Photo Peter J. Scalise

Federal Tax Credits & Incentives Practice Leader

New York, NY

User Photo John L Stancil

Tax Advisor/CEO

Lakeland, FL

User Photo John R Dundon, II EA

Tax Director

Denver, CO

User Photo Kevin Johnson MS, JD, LL.M, CPA

Partner

Philadelphia, PA

User Photo Brian Weaver, CPA, MBA

Managing Tax Consultant

Des Plaines, IL

User Photo William Rogers, CFP, MBA, EA

Rancho Santa Fe, CA

Title

User Photo Clinton J Donnelly, LLM

International Tax Advisor

Panama City, Panama

User Photo Jim Marshall, EA

President/ Tax And Financial Advisor

Scottsdale, AZ

User Photo Brett A Thompson, JD, CPA

Managing Tax Lawyer

Katy, TX

User Photo Charles Woodson, EA

Tax Advisor/Fiduciary Coach

San Diego, CA

User Photo John Richardson

Tax Lawyer

Toronto, Canada

User Photo Clifford Benjamin

Senior Tax Principal

Daytona Beach, FL

User Photo Kazim Qasim, EA, CTC

Managing Tax Advisor/CEO

Orlando, FL

 

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

INCREASE KNOWLEDGE WITH EVERY ISSUE OF TAXCONNECTIONS

 

Learn from tax advisors, straight to your inbox

Update My Email Address
Contact Us Today