upInTheAir wrote:
can't your parents just pay the school directly?
Don't remember if that applies to grad school. I think most parents set up 529 plan for such purpose.
mreevit wrote:
I'm not sure if this was done away with, but there was a $ 1 million lifetime gift tax limit (in addition to the 13,000/year limit). So, they could give you up to $1 million if that law hasn't expired.
That's part of the unified credit for gift and estate tax. 2010 thing is that they simply reduced the limit after 2010 (was the plan). But I think they created new exemption of $5 million for 2011. I think it used to be total of $3.5 million or so.
ProfessionalKazooist wrote:
they'll also need to charge you a fair market interest rate AND then they'll be taxed upon the imputed income from that.
Yes. Interest has to be charged to make it a legitimate loan.
Best way to do this (and this depends on the state), find out if your state lets you use 529 plan for grad school. Ask your parents to set it up. They can contribute up to 5 times the allowable gift exclusion amount. So assuming it is still $13,000 a yr, each of your parent can contribute $65,000 each ($130,000 total) in one yr. But your parents have to report a pro-rated portion of their contribution each year for up to 5 years. Second, they can't make any additional gifts to you until the pro-rated period is completed.