You can gift a certain amount every year without having to report it.
Q. My mother wants to give $15,000 to my son, who is 16. What will that mean for taxes for both of them, and how should she give it? Should she put it in a 529 plan, an UTMA or just write a check?There are some tax considerations, but deciding how to receive the money and where to put it really depends on the purpose of the money.to another person without any tax consequence, said Alexandra Makowski, a certified financial planner with CFS Investment Advisory Services in Totowa.
If the purpose is for your son to purchase a car when he turns 18 or use it for something else in the short term, one to three years, then keeping it in cash would be the safest option, she said. In that case, it may be best to have a check deposited in his bank account as long as he has the discipline not to spend it.
Qualified education expenses includes $10,000 per year for K-12 school tuition, along with no expense limit on college expenses such as tuition, room and board, and books and supplies. “The downside of putting money into a 529 is if you do not use the funds for a qualified distribution you have to pay the capital gains tax on any growth and a 10% penalty,” she said.
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