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Robin D.
Robin D., Senior Tax Advisor 4
Category: Tax
Satisfied Customers: 15308
Experience:  15years with H & R Block. Divisional leader, Instructor
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I want to give $20,000 to my nephew who is in college and

Customer Question

I want to give $20,000 to my nephew who is in college and would really like to get a tax-deduction for it. Is it possible to setup a charitable trust or something I could donate to; take a deduction; for that would go to him???
Submitted: 1 year ago.
Category: Tax
Expert:  Robin D. replied 1 year ago.

Gifts to individuals are not tax deductible. A charitable trust lets you donate to charity, and it gives you a tax break. But if you just want to make a few small charitable gifts, then a charitable trust probably isn't worth the bother. You would also not be allowed to ear mark money for his specific use.

If you still give the money for his education you would want to pay the amount directly to the school so it will be exempt from Gift Tax.

Tuition expenses you pay for someone directly to the institution are not taxable gifts and no reporting is required by you.

Customer: replied 1 year ago.
Thanks. I have a custodial account setup in his name but only a few thousand in it. Can I deposite the $20k in that and at least be exempt from Gift Tax?
Expert:  Robin D. replied 1 year ago.

You are most welcome.

You would not be exempt if you make a gift that for the tuition outside a direct payment to the educational institution.

You would need to report the gift (form 709) but you would not actually have tax to pay as long as you have not used up your life time allowance ($5.43 million).

The Form 709 shows you are reducing your lifetime allowance by the $6000 (the amount over the annual allowance which is $14,000).

If my answer addressed your question please rate below or above (let me know if you have difficulty as I believe the system changed), if you need more information reply below.