parental payment for law school tuition for their 26 year old child - considered a gift?

[neiloy]

Does the IRS consider either of the following a 'gift' by the parent for: 

1.  Payment of tuition (directly to the educational institution) for law school (or B-school, med school, etc) for a 26 year-old child?

2. Payment of rent/food/clothing (during law school, etc.) for the 26 year-old child?

(would also appreciate the answer if different for a 23 year-old child)

Thank you.

Neil

[tagteam]

---

@neiloy wrote:

1.  Payment of tuition (directly to the educational institution) for law school (or B-school, med school, etc) for a 26 year-old child?

---

No, this falls under the educational exclusion.

Educational exclusion.

The gift tax does not apply to an amount you paid on behalf of an individual to a qualifying domestic or foreign educational organization as tuition for the education or training of the individual. A qualifying educational organization is one that normally maintains a regular faculty and curriculum and normally has a regularly enrolled body of pupils or students in attendance at the place where its educational activities are regularly carried on. See section 170(b)(1)(A)(ii) and its regulations.

The payment must be made directly to the qualifying educational organization and it must be for tuition. No educational exclusion is allowed for amounts paid for books, supplies, room and board, or other similar expenses that are not direct tuition costs. To the extent that the payment to the educational organization was for something other than tuition, it is a gift to the individual for whose benefit it was made, and may be offset by the annual exclusion if it is otherwise available.

[tagteam]

See https://www.irs.gov/publications/p501#en_US_2022_publink1000220940

If certain criteria are met such that the child is a qualifying relative (a dependent), the payment of rent, clothing, food, etc., would not be considered to be a gift.

[NCperson]

@neiloy run  your scenario through the IRS app to determine whether your 26 year old is a dependent.....just because your child is 26 doesn't mean he is not a dependent...

https://www.irs.gov/help/ita/whom-may-i-claim-as-a-dependent

when educational gifts are made directly to the educational institution, the "normal" gift limit of $17,000 doesn't apply.  The payment to the University is considered a gift with no reporting or tax implications.