What can I pay of my son's?

[Frustrated]

My son will be 23 in December. He will have some earned income, but not much.
He graduated college in May and will be a graduate student from 6/16 to 8/17.

I know I can pay his tuition, but can I also pay his rent and stuff like that without it being considered a gift? Presumably he will still be a dependent this year and I can pay what I want of his expenses, and still give him a $14,000 gift tax free?

How about next year? He will (hopefully) have more significant income, but I will probably pay more than half of his expenses for the year.

I ran this through the calculator on IRS's website and it says he will be my dependent for both years, but I don't trust the IRS getting anything right.

On a related issue, as I read it, he he pays kiddie tax if he is under 24, so he will have kiddie tax in 2016, but not in 2017. Is that correct?

Thanks much

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[Frustrated]

On Wednesday, June 8, 2016 at 2:27:32 PM UTC-4, Frustrated wrote:
> My son will be 23 in December. He will have some earned income, but not much.
> He graduated college in May and will be a graduate student from 6/16 to 8/17.
>
> I know I can pay his tuition, but can I also pay his rent and stuff like that without it being considered a gift? Presumably he will still be a dependent this year and I can pay what I want of his expenses, and still give him a $14,000 gift tax free?
>
> How about next year? He will (hopefully) have more significant income, but I will probably pay more than half of his expenses for the year.
>
> I ran this through the calculator on IRS's website and it says he will be my dependent for both years, but I don't trust the IRS getting anything right.
>
> On a related issue, as I read it, he he pays kiddie tax if he is under 24, so he will have kiddie tax in 2016, but not in 2017. Is that correct?
>
> Thanks much
>

Just curious why no replies in 3 weeks. Was the question too complicated? Too vague? Too stupid?

[Stuart Bronstein]

Frustrated <wa...@lippman.info> wrote:
> Frustrated wrote:

>> My son will be 23 in December. He will have some earned income,
>> but not much. He graduated college in May and will be a graduate
>> student from 6/16 to 8/17.
>>
>> I know I can pay his tuition, but can I also pay his rent and
>> stuff like that without it being considered a gift? Presumably
>> he will still be a dependent this year and I can pay what I want
>> of his expenses, and still give him a $14,000 gift tax free?
>>
>> How about next year? He will (hopefully) have more significant
>> income, but I will probably pay more than half of his expenses
>> for the year.
>>
>> I ran this through the calculator on IRS's website and it says he
>> will be my dependent for both years, but I don't trust the IRS
>> getting anything right.

You're right not to trust them, and by law you cannot normaly rely on
what they say that isn't in a revenue ruling or regulation. But as a
practical matter if you follow what they say on a website and not
just what some random IRS employee tells you, are you probably OK.

> Just curious why no replies in 3 weeks. Was the question too
> complicated? Too vague? Too stupid?

It is complex, and in part could be based on state law. What a
parent's obligation to his adult children are can vary by state. And
that can affect what would be considered support as opposed to a
gift.

If this is really a significant issue for you, you should consult a
local lawyer who is knowledgeable about both tax and family law.


--
Stu
http://DownToEarthLawyer.com
https://www.etsy.com/shop/studiobethdesigns

[Alan]

On 6/28/16 8:46 AM, Frustrated wrote:
> On Wednesday, June 8, 2016 at 2:27:32 PM UTC-4, Frustrated wrote:
>> My son will be 23 in December. He will have some earned income, but not much.
>> He graduated college in May and will be a graduate student from 6/16 to 8/17.
>>
>> I know I can pay his tuition, but can I also pay his rent and stuff like that without it being considered a gift? Presumably he will still be a dependent this year and I can pay what I want of his expenses, and still give him a $14,000 gift tax free?
>>

In 2016, assuming that your son's domicile is still your home, he will
be your qualifying child (QC) as long as he is not self-supporting. (QC
= Your child under age 24, lives with you for more than 6 months and is
a full time student for at least 5 months). For purposes of this test
support includes his lodging (rent, utilities, etc.), education,
clothing, food, medical, dental, travel, recreation and entertainment.

>> How about next year? He will (hopefully) have more significant income, but I will probably pay more than half of his expenses for the year.

In 2017, your son will no longer be under age 24 and can not be your QC.
Therefore, if his gross income is at least the value of one personal
exemption (approx. $4100), he can not be your Qualifying Relative for
the dependency test regardless of how much you spend supporting him.

>>
>> I ran this through the calculator on IRS's website and it says he will be my dependent for both years, but I don't trust the IRS getting anything right.
>>
>> On a related issue, as I read it, he he pays kiddie tax if he is under 24, so he will have kiddie tax in 2016, but not in 2017. Is that correct?

His 2016 unearned income may be subject to your tax rate if his unearned
income is more than $2100 and his earned income was not more than half
of his total support for the year. In 2017, he would pay tax based on
his own rates.