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Is there a gift tax when paying off a child’s student loan?

Is there a gift tax when paying off a child’s student loan?

Gifting money to help a child pay off debts may trigger the federal gift tax. Tradition’s Chip Wieczorek, CFP reviews the gift tax law on NJ.com.

Q. My son has large college loans and I’m thinking of paying them off for him. Are there gifting consequences I need to know about or a gift tax?

— Parent

A. What a wonderful gift you will be giving to your son.

And yes, there are some potential tax consequences when planning a sizeable gift.

As of 2019, the annual federal gift exemption amount is $15,000 per year and paying these loans would be considered a gift by the IRS, said Chip Wieczorek, a certified financial planner and investment advisor with Tradition Capital Management in Summit.

Read the entire answer here.

 

 

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