How To Save For A Child's Education

Money As Gifts

Giving a child a college education with money as a gift is one way to help them pay for college, but it must be done correctly so the money remains nontaxable. Monetary gifts of a certain amount are taxable, and many fail to realize money as a gift can cost them much more than they were bargaining for. The good news is a person can give money as a gift to a student without paying taxes on it and without the student paying taxes on it if it’s done correctly. Gift tax is expensive, but paying less than fourteen thousand dollars at a time is the way to avoid it. The giver and the recipient are exempt from paying taxes on this money as long as the giver does not give more than fourteen thousand dollars per calendar year to more than one person. Once it’s more than this amount in one year, the money becomes taxable.