In paying down a girlfriend's student loans, does the amount I pay count towards the $14K gift tax exclusion? Alternatively, does this hold true if I am a cosigner?

[xmasbaby0 · Accepted solution]

If you co-signed for your GF's student loan, then you can use the interest from the 1098E on your tax return.  Otherwise, you cannot use it on your tax return.  Only the person who is legally obligated to pay the student loan (including a co-signer) can use the interest.  If you are "gifting" her the money to pay the loan, a gift given to her is not deductible for you.  If you give her more than $14,000 you need to complete a 709 gift tax form.

Turbo Tax does not support the gift tax form 709, but here is a link:

https://www.irs.gov/pub/irs-pdf/f709.pdf

[trgaucher]

I am less worried about deductions on my end (I will likely be phased out) than if I will bring down my lifetime gift exemption by paying down her student loans in excess of $14K per year.

[xmasbaby0]

Your lifetime gift limit without having to PAY gift taxes is $5.4 million.

[trgaucher]

Understood, but I would like to avoid reducing that total if possible, hence why I am wondering if paying her student loans when not a cosigner on them in excess of $14,000 would count against the lifetime gift limit of $5.49 million.

[xmasbaby0]

Yes, if you give her more than $14,000 it counts toward the lifetime limit. If you are not a cosigner--which it seems you are not--then avoid the gift amount by giving her under $14,000.