My siblings and I were having various financial discussions over Easter and it got me wondering on the 18k gift limit for 2024. Couldn’t someone, lets say a father, open up a joint brokerage or savings account with his son and deposit sums over the 18k (lets say 100k), and then son can withdraw funds; thus skirting the 18k gift limit since it is a joint account?
Thoughts? Is there some tax provision I’m unaware of preventing this? Just curious…don’t know anyone actually looking to do this.
I would point out that even if you go over the $18k gift limit, unless you have also gone over the 2024 lifetime exemption amount of $13.61MM, there is no gift tax that is due. All you have to do is fill out a gift tax form: Form 709 f709.pdf (irs.gov)
I would also point out that if it’s a married couple giving to another married couple, the amount that can be given is $72k
In the case you outline, if the son withdraws more than $18k that he did not deposit into the account himself (or was his pro-rata share of earnings on his deposit), it is considered a gift and a gift tax form would need to be filled out by the father.
AJ
This got me wondering if paying someone’s tuition is considered a gift? I paid for my grandson’s trade school back in 2022. I imagine it must be, but I can imagine education having its own set of rules.
Gift tax has exemptions for education and medical expenses.
It depends. If you pay it directly to the school, it’s not considered a gift. If you pay it to the person so that they can pay the school, then it is considered a gift.
Why, yes, it does. Lots of them. As a grandparent, you are not eligible to claim a tax credit (American Opportunity Tax Credit or Lifetime Learning Credit) unless the grandchild was claimed as your dependent. However, if you were under 59 1/2 at the time and used money from an IRA, you could get the early withdrawal penalty waived. You also could have pulled out money tax-free from a previously set up 529 plan, if the trade school was eligible to participate in a student aid program administered by the Dept of Education. Lots more information about education benefits in IRS Pub 970 p970.pdf (irs.gov)
AJ
If you follow the rules. You can’t give money to the person so they can pay the bill and still claim it as a education or medical expense - you have to pay the school or medical provider directly.
Edited to add: Also, even if paid directly to the school, things like room and board expenses are not eligible education expenses for exemption from the gift rules - only tuition paid directly to the school is exempt from gift tax rules.
AJ
I paid the school. 
I’m well past any age limits. The money came from where all incremental (and much regular) spending comes from, my IRA, and wasn’t treated any differently than the rest.
Tuition was close to the 18k. It was room and board that pushed it over, but that was a relatively small amount.
Thanks as always, AJ.
Since you paid the school, the tuition part of the payment is not considered to be a gift.
The room and board part is considered to be a gift. Assuming that, plus any other gifts your gave your grandson in 2022, totaled below the $16k amount in effect that year, you don’t have to file a gift tax form for 2022.
AJ
Thanks for the assurance. I think that was the year I gave him my old car (11 years, 120k), but that was what I have heard called a transportation piece. Which is to say the only value in it was getting from A to B.
I presume the 120k meant miles, not dollar value. If it had been dollar value, then you would have had to fill out a gift tax form.
That said, there was definitely a monetary value to that car, especially in 2022, when used car prices had escalated significantly. That was the year that my brothers and I sold my Mom’s 12 year old (2010) Civic for $8,800.
AJ