Wednesday, May 18, 2011 NEET Tips
NEET Tips answers questions posed by visitors to the NEET website
Do payments for education avoid generation skipping transfer taxes?
Yes, provided the payment for tuition is a qualified transfer falling under Internal Revenue Code Section 2503(e). Qualifying tuition payments are not treated as a transfer of property by gift, nor are they subject to the generation skipping transfer tax (GST).
GST exemptions apply to the annual gift tax exclusion (currently $13,000 per year) and direct payments for qualifying tuition or medical expenses under IRC 2503(e) because the GST rate of tax depends on the definition of the exclusion ratio. The exclusion ratio for direct skips that are nontaxable gifts is set equal to zero, therefore there is no tax on these transfers.
For more information on education payments, see the NEET article:
Unlimited Educational and Medical Payments Allowed Under Gift Tax Exemption |