A. But I have been told that I need to pay taxes on the money I am gifting my son. Is this incorrect?
Q. Yes and no. You do not pay tax because you made a gift. You pay tax because you have taken an IRA distribution.
Q. If I file 709 do I then not report the gifts?
A. Filing a form 709 is how you report a gift, if you needed to report them. In your case, you do not need to report the gift, for two reasons: 1. your gift didn't exceed the limit ($16K) and 2. there is an exception (to the form 709 requirement) for the direct payment of educational expenses for close relatives. "Direct payment" means you paid the school, rather than giving him the money.
