Education

Forum|Forum|4 years ago
June 8, 2021
2 replies
0 views

My dad is making a direct payment to the university for my graduate class tuition. If I get a grade B or above, my employer may reimburse the tuition. If they do, is the tuition paid my dad directly to the university be considered as a gift to me.

macuser_22

Employee

@girigiri wrote:

My dad is making a direct payment to the university for my graduate class tuition. If I get a grade B or above, my employer may reimburse the tuition. If they do, is the tuition paid my dad directly to the university be considered as a gift to me.

If you are not a dependent then anyone paying your tuition is a gift whether you are reimbursed or not. But gifts are not reportable by the receiver of the gift - only reportable by the giver if it exceeds $15,000 on a 709 Gift tax return (no actual tax, just reduces the $11.4 million lifetime exemption.)

**Disclaimer: This post is for discussion purposes only and is NOT tax advice. The author takes no responsibility for the accuracy of any information in this post.**

Hal_Al

Employee

Q. Will the payment made by father in advance directly to the university be considered as Gift to me?

A. No. Tuition payments made directly to a college are not considered gifts for tax purposes (the education exception). Furthermore, if you are your parent's dependent, the money is considered support not a gift.

References: https://www.thebalance.com/what-gifts-are-not-subject-to-the-gift-tax-3505684

https://www.schiffhardin.com/insights/publications/2018/faqs-on-the-use-of-the-gift-tax-medical-and-...

Any amount reimbursed by tax free employer assistance is not eligible for a tuition credit or deduction. If the employer reimbursement is treated as taxable income, then the tuition is eligible for the credit or deduction. Employers are allowed to pay up to $5250 of tax free tuition, for an employee. So, it depends on how your employer handles the reimbursement (and whether their tuition reimbursement plan meets IRS rules). The fact that your parent made the original payment is not relevant.

rjs

Employee

Are you the father or the son? You posted one question saying that you will pay your son's tuition, and this question saying that your father will pay your tuition. Now you have discussions of the same situation going on in two separate threads. You are causing confusion and extra work for the people who are trying to help you.

girigiriAuthor

Sorry for the confusion.

I am the son and also not a dependent on my father's tax return. Basically, wanted to know if he pays tuition directly to the school and potentially if my employer reimburses my tuition expense (after obtaining satisfactory grade), will the money paid by my father to the school for my tuition considered as a Gift to me

Hal_Al

Employee

Q. Will the money paid by my father to the school for my tuition considered as a Gift to me?

A. No. "Payments made directly to a qualifying domestic or foreign learning institution for the education of an individual qualify for the educational exclusion under Section 170(b)(1)(A)(ii) of the IRC".

This is true, regardless of relationship, dependency or reimbursement.