Fiction: Providing financial support to my adult child is a good idea since there are no taxes on the amount I give.
Fact: One element to consider when providing substantial financial support to a child is the annual IRS gifting limit. At what point does your monetary support become taxable? For 2016, couples can gift up to $28,000 before having to report the amount to the IRS. In some instances, the same limit may apply if you loan the money to your child (e.g., as a down payment on a house) but either consider it interest-free or charge below-market interest. For any amounts over the limit, you'll be on the hook for taxes. Itís important to note that gift and estate tax rules differ from state to state, so be sure to consult with a qualified tax professional about your particular situation.
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