Check out some similar questions!

veew · Mar 25, 2009, 06:53 AM

We want to set up a college fund for my daughter's college education, that will be donated via a friend. A fund that will allow her to have access to the monies as needed for college through out the years. What kind of fund would we need to set up that would be tax free?

veew · Mar 25, 2009, 06:57 AM

What is the max amt of a $ gift amount that one can received without being taxed in 2009?

ebaines · Mar 25, 2009, 09:14 AM

Gifts from one idividual to another are not taxable to the receiver - if someone gave you $1M as a gift you (as the recipient) would have no tax consequences.

However, the giver may very well have some tax conseqences. In 2009 an individual can gift up to $13,000 in a calendar year with no consequences - $26K for couples. Gifts above that must be reported, a gift tax may be due, and there are potential issues for the giver's estate planning.

As for your college funding - the gift tax issue can be avoided if the person who is helping with costs writes a check directly to the institution to cover expenses. It's important that the check go right to the school and not through you.

ebaines · Mar 25, 2009, 09:25 AM

One other thought - if you have set up a 529 plan to help pay for college costs, your benefactor can make a contribution to that. The $13K annual gift limit still applies, but there's a trick that allows gifts to be averaged over 5 years. The rules can be a bit tricky - post back if you need more detail on this.