Grandparents can help with college costs

Are your parents wanting to help pay for your children’s education? There are several ways to do this, each with its own limitations and tax consequences.

GIFTS- The simplest way is to have grandparents make an outright cash gift to your child each year. In 2014, you can give up to $14,000 without any gift tax liability. Even better, if grandma and grandpa both want to give, they can give jointly to each of their grandchildren, up to $28,000 per year.

DIRECT PAYMENTS- Unlimited amounts without gift tax consequences are available if payments are made directly to a qualified education institution on behalf of the child. Payments can only be for tuition. Dorm fees, meals, books, etc do not apply.

EDUCATION ACCOUNTS- Grandparents may elect to set up a Coverdell education savings account or a Section 529 plan for your child. These plans offer tax-free growth of amounts you contribute to them. Age, income, and contribution limits do apply.

To discuss te options best suited to your circumstances, speak with an expert today 910-323-3100