giving gifts and taxes

[lacarberry]

My 90 year old mother took $14,000 out of her IRA to give to my daughter to pay some of her school loan.  Now my mother is being taxed on this money and it increases her total income.  Is there a way to show that she doesnt have it?  Does she have to fill out a gift tax form?  Does my daughter?

[xmasbaby0]

No, neither one of them has to enter anything about the gift.   But unfortunately your mom has to pay tax on the money she took out.   The fact that she gave the money to her grandchild is irrelevant.  

[Hal_Al]

People over age 72 (70.5 until a couple of years ago) are required to take a distribution, from their IRA (except a Roth IRA) of a certain amount  each year ( the RMD -Required Minimum Distribution).  So your mother was required to take money out of her IRA, regardless of what she did with it*.  At age 90, she was required to withdraw 8.2% of the money in her account at the beginning if the year. 

*The only way to avoid tax on the distribution is with a Qualified Charitable Distribution (QCD)