So my eldest daughter is starting college in the fall, trying to figure out the best way to fund her tuition, with an eye on making sure I don't do anything that will screw up her FAFSA for future years or trigger tax implications (gift tax, etc) if they can be avoided. Her mother and I are divorced, mother is primary custodian and makes significantly less income than I do. While no longer married, we are still very close and I trust her implicitly that any funds I give her will go straight to supporting my daughter in college.
My father established a Coverdell ESA a number of years ago for my daughter (when I was still married to my now ex-wife), with me as the responsible party, and there is about a year's worth of college attendance cost sitting in there now (about $35k).
Additionally, we have an extended quasi-family (very close family friends) that wants to make significant ($10-15k) contributions towards the cost of her attending school (probably on an annual basis). They have not made any contributions yet as I told them to hold off doing anything until I get this sorted, but obviously time is of the essence.
Lastly, I will be contributing to her attending on an ongoing basis.
I know I'm late to the party on getting this planned, but only recently reached a point of financial security where I could even think about such issues. Any help/advice would be greatly appreciated.
Things I need help with:
- Best ways to get the funds out of the Coverdell so that it doesn't come over as untaxed income to my daughter
- Best plan for taking in the very generous offers from the close family friends while ensuring they don't get a tax bill for their generosity (if that's avoidable)
- How to contribute towards my daughter's tuition myself without having it be treated as untaxed income.
To be clear, not looking in any way to skirt the law here - just trying to be smart and not cause myself (or my daughter) headaches for future years at school.
Submitted May 10, 2021 at 05:52PM by mgarvin22 https://ift.tt/3hh7CNV
