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loopholes for private school tuition?

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annielou

Guest
Have two children in private grade school. Have been told I can gift them tuition dollars and they can pay tuition from an individual or joint checking account. Thought it was strange that daughter had a 4th grade friend who would write her tuition payments. Any validity to this being a tax loophole?
 


ALawyer

Senior Member
My guess is that the parents are seeking to have the first $1000 of income earned in the kid's name not taxed. (Anything above that is attributed to them.) So they put in say $20,000 in the bank, it earns 5% or $1000, and they use that to pay the tuition, saving them the tax on the interest -- perhaps $250 - $350.

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