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Posted by Brian on January 23, 2008, 1:59 pm
Please log in for more thread options joetaxpayer wrote:
> Bill Brown wrote:
>>
>>> Brian wrote:
>>>
>>>> I have clients who want to pay their child's income tax liability. I
>>>> believe that this would be a gift to the child.
>>>
>>>> Gift tax rules exclude legally required support from classification as
>>>> gifts. The clients think that they can pay their child's income tax and
>>>> claim it as support. Is there an IRS definition of support somewhere?
>>>
> Brian - You've told the clients they can gift $24,000 with no tax due
> each year? I trust you're asking because they are at the annual limit? I
> don't believe paying the taxes is considered support, it's an obligation
> of the child, whether from earned income (should have had withholdings)
> or from interest, dividends, or capital gains. Either way, the tax
> should be paid from that money.
> JOE
Yes the clients are already making maximum annual exclusion gifts. They
are looking for loopholes besides the education and health care payment
exclusions.
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