Monday, May. 02, 2011
Be Aware of Income Tax Rules
If you are giving money to your grown children after they move out of the house, that money is considered income for them. Parents are allowed to give $13,000 ($26,000 for couples) tax-free each year to each of their kids. More than that generates a taxable event. If you want to give more, consider paying for your kids to finish college or get another degree. Education spending, as long as you pay it directly to the school, is exempt from the gift-tax cap. Because most people do not work in the same field as their major, even with a college education your child may benefit from more training or schooling.