Basically you have given your granddaughter a gift. Gifts are never tax deductible
unless they are donations
made to a qualified charity.
In fact, if the value of the gift that you gave your granddaughter exceeded $13,000, you would need to report this by filing Form
709, Gift Tax Return
First, if and when gift tax
is ever due, it is paid by the donor and not by the recipient of the gift. However, under current regulations
, each taxpayer is allowed to give gifts in their lifetime of up to $1 million before any gift tax becomes due. This is part of what is called the Uniform Tax Credit
In addition to the $1 million lifetime exemption, each individual
is allowed to give annual gifts of up to $13,000 to any number of individuals, and those gifts do not even apply towards the lifetime exemption, nor do they need to be reported. Gifts which exceed the annual exclusion of $13,000 must be reported by the donor by filing Form 709 with the IRS
to report the value of the gift. However, no tax is actually due unless that donor has already reached his $1 million lifetime limit. The amount reported then reduces that donor's remaining lifetime balance that he may give in non-taxable gifts
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Thank you kallieann.