Brendan Willmann, CPA, EA, CFP®
Asheville: 828-348-8698
Cincinnati: 513-549-2736

Educational Exclusion

In general, gifts to a non-spouse that exceed $14,000 (in 2013) require the filing of a gift tax return (Form 709).

However, there are three exclusions: political organizations, educational exclusions and medical exclusions.  Transfers that qualify for any one of these three exclusions are not subject to gift tax and do not require the filing of a gift tax return.

The educational exclusion is most often used by grandparents who have a desire to reduce their taxable estate and are inclined to help with their grandchild’s tuition expenses.  The IRS is very clear that in addition to the school meeting basic requirements, such payments must follow two additional stipulations: The payments must be made “directly to the qualifying educational organization” and the payments “must be for tuition.”1  Further explanation provided by the IRS states that the exclusion does not apply for related educational expenses such as books, room and board.

While the annual exclusion offers a significant opportunity for those actively reducing their taxable estate, it is should be noted that failure to follow the IRS requirements can result in a taxable gift and may require the filing of a gift tax return.



The articles presented on this blog are general in nature and should not be assumed to be applicable to your situation. In addition, tax law changes daily and the articles on this blog are not updated to reflect these changes. Anyone receiving any part of the information on this blog should not rely on or act or refrain from acting on the basis of any matter or information contained in this blog without seeking appropriate tax, legal or other professional advice. The transmission and receipt of information contained on this blog does not form or constitute a client relationship. Nothing in this blog constitutes legal advice. Opinions rendered by tax professionals are not authority.  You agree to hold Brendan Willmann, EA, forever harmless from any liability for your use or failure to use the information, advice, referrals, or suggestions provided by this blog at any time. 


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