Hello mike

Any tax forms which are issued such as a 1099, 1098 or W-2 are cross referenced to make sure they match what has been reported by the taxpayer.

No one can claim a tax deduction for money given to a family member. You say "in order to avoid gift tax". If and when gift tax is ever due, it is paid by the donor of the gift and not by the person receiving the gift. Gifts given to family members or friends or anyone other than a qualified charitable organization are not allowed as a tax deduction, and your deduction would not be allowed.

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Thank you mike

Hello mike,

That's not exactly what it means when they say that gifts for tuition can be excluded from gift tax.

Every year you are allowed to give another individual up to $13,000 in gifts without any reporting that must be done. If your gifts exceed $13,000 to one person, then you must file Form 709 to report the gifts. But still no gift tax is ever due unless a person uses up his allowed lifetime exemption on gifts which is $1 million.

Gifts that are given for tuition do not count towards your gift limit, but at the same time they cannot be taken as deductions. The only time that you can claim a deduction for tuition expenses is if you paid the tuition for yourself or for your spouse or for someone that you can claim as a dependent. If you pay tuition for one of those persons, then you may claim a deduction for tuition expenses. But you cannot just claim a deduction for money you gave to someone else to use for tuition.

If the person who received the money for tuition is a dependent, then that person should receive a 1098 from from the school that shows how much tuition he paid. He should then give you that 1098 form and you can claim the deduction on your tax return.