8

From my understanding in the US, a father can give an individual gift of $15,000 to a child (or anyone) without any tax liabilities and without impacting the lifetime allowance. If the father wants to give more money, can he make a gift to a third party he trusts (e.g., his brother/uncle of his son) who then makes a gift to the child, or is that tax fraud?

23

If you give a gift with stings attached, then it isn't a gift. Thus it would be viewed as trying to get around the tax law. The law regarding this is the Step Transaction Doctrine.

But a spouse can also give a gift, and you can give a gift to your child's spouse. Thus a couple can give another couple 4x the limit each year.

If the child is in school then the giver can pay tuition directly and not worry about the limit. They can't send it to the student, they have to send it to the school.

Of course exceeding the limit in a year, does require paperwork, but the lifetime allowance is $11.4M as of 2019. Current tax law has this number adjust for inflation. If this is is something to worry about, consult a tax attorney to see how to do this legally.

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    Nice. The first sentence is key to so many gift questions... – TTT Mar 27 at 20:03
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    There were a couple things I'd have posted, but 2 minor points don't make a full answer. If my edits are unwelcome, you can roll back. I won't take offense. – JTP - Apologise to Monica Mar 27 at 20:33
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    @JoeTaxpayer the step transaction stuff is perfect. – StrongBad Mar 27 at 20:58
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    The first sentence isn't categorically true; in particular, it's routine for charitable gifts to come with instructions on how they must be used (particular scholarships, particular sorts of needy recipients, etc.). – chrylis -on strike- Mar 28 at 0:23
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    @chrylis - On English.SE, I'd agree. Here, the distinction is that you are not talking about a gift, but a Donation. (And the IRS tends to prefer the phrase 'charitable contribution'). For the answer here, it's a given that this is a gift to an individual. – JTP - Apologise to Monica Mar 28 at 9:39

protected by JTP - Apologise to Monica Mar 27 at 21:07

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