Gift Tax

What is the name of your state? Pennsylvania

I took out a (10 year) home equity loan of $15,000 to pay into the State sponsored Pennsylvania Tuition Account Program (TAP 529) for my son. In reading their literature, I found that the gift tax laws apply ($11,000 limit). Also, I read that there is a possibility that it can be averaged over 5 years so that the tax could be avoided. It did not go into any detail. Is this true and how does it work? Are there any special forms?

First of all, if you are married, then you and your spouse can elect to join in the gift and in that case there would be a $22,000 annual exclusion.

If you are not married, you would have to file a gift tax return, but there would be no tax because in addition to the $11,000 annual exclusion, you have a lifetime exclusion of $1,000,000, which you can apply against the $4,000.

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Or you could give $11,000 to your son and give $4,000 to your ex-wife/sibling/parents and THEY could give $4,000 to your son, thus avoiding the bother of averaging the gift.