Financially Support Another Person | Grandchild

[MaxRLC]

Without claiming a Grandchild as a dependent, Turbo Tax asks if the taxpayer/filer provides support for another person.

If the tax filer (Grandpa) has a Grandchild that he periodically sends money to (grandchild is attending college) to help them with living expenses, etc., should the answer to that question be Yes?   The Grandchild will be claimed as a dependent on the tax return of their parent - Grandpa is not interested in picking up a dependent on his return - just contributing to helping his Grandchild.  Is this a gift situation?  

What is the benefit of identifying the support that Grandpa gives/provides to the Grandchild?   Also, the amounts that Grandpa provides/gives are less than 50% of the total support the Grandchild receives primarily from parents. 

Thank you and Help.

[xmasbaby0]

Gifts to your grandchild are not deductible and you do enter anything about them on your tax return.   If you are not claiming your grandchild as a dependent then you do not enter anything about the money sent to the school or for living expenses on your return.   Those questions about "support" are to navigate you to claiming a dependent.

Gifts given to family members, friends or other individuals are not deductible.   Gifts received are not taxable to the person who received the gift, and are not entered on a tax return.

If your gift exceeds the yearly limit ($18,000 per individual)  imposed by the gift tax rules, then you will need to complete a Form 709 gift tax form and send it to the IRS, although it is very unlikely that you will owe any tax.

TurboTax does not support Form 709.  It is not an income tax form and would not be included as part of an income tax return.

Here is a link to the form:

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

https://turbotax.intuit.com/tax-tips/estates/the-gift-tax-made-simple/L5tGWVC8N

[VictoriaD75]

If the support is less than 50%, there is no need to answer Yes to that question. The grandchild would not be claimed as a dependent on the tax return. The amounts provided to the grandchild are considered a gift and would not need to be reported on the tax return. Gifts totally more than $18,000 would require a Form 709 be completed to report a gift tax.

@MaxRLC