Private School Tuition: Contribute without Triggering Gift Tax Limits

It’s not often that you come across something that triggers one’s “why doesn’t everybody know this?”

But, I did ask myself that question after my interview with Mike Szydlowski, Woodberry Forest School, financial aid director and independent tax preparer.

Is Private School Tax Deductible? Your Tuition Questions Answered

I asked Mike about tax implications of grandparent, or anyone’s, gift contributions toward private school tuition and learned something completely new to me.

BF: Many families now have grandparents contributing toward a grandchild’s private school tuition. Are there any rules of which they need to be aware?

MS: Yes, a current feature of the tax code allows a grandparent (or anyone) to sidestep the $14,000 annual gift exclusion when paying tuition (tuition only, not room and board) or medical expenses for a grandchild.

The grandparent can pay the tuition directly to the school and not trigger the $14,000 exclusion amount or the need to file a gift tax return (IRS Form 709).

An important reminder: if Grandparents take advantage of this direct payment of tuition, they cannot claim a charitable deduction…they are not making a gift to the school; they are paying tuition.

Disclaimer: This is general information in reply to these questions. Each family’s situation is unique. You need to check with your tax preparer when working through these questions on your own.

Brian Fisher

A product of both private and public education, Brian Fisher served as a teacher, coach, dorm parent, and administrator at three different boarding schools. Brian also fills the role of Director of Development at Wolfeboro, The Summer Boarding School, in NH along with being a partner at AdmissionsQuest.

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