Gift is not deductible from income tax - right? Tax implications for monetary gifts

Thanks for explaining! Quick question - what if she decides to help pay for her grandchild's college tuition? I heard educational expenses might have different rules? Also, what if she's writing these checks from a business she owns rather than personal accounts?

Educational payments made directly to a qualified educational institution for someone's tuition are completely exempt from gift tax and don't count toward the annual exclusion amount. Same goes for payments made directly to medical providers for someone's care. These are unlimited exemptions as long as the money goes straight to the institution, not to the individual first. If she's thinking of making these gifts from a business she owns, that's a completely different situation and could potentially be viewed as income to the recipients or improper business deductions. Business funds should generally not be used for personal gifts - that would likely trigger audit concerns and potential tax issues for both her and the business.

Does this tool work for analyzing business taxes too? My parents have a small LLC and are always confused about what counts as a business expense versus a personal gift.

I'm a little hesitant about uploading tax docs to random websites. How secure is this service? And can it actually check if you're applying the gift tax exclusion correctly?

The tool absolutely works for analyzing business taxes including LLCs, S-corps, and other small business structures. It's especially helpful for identifying when personal and business expenses are being incorrectly categorized, which sounds perfect for your parents' situation. Regarding security concerns, I was skeptical at first too. The platform uses bank-level encryption and doesn't store your documents after analysis. As for gift tax verification, it specifically flags patterns that suggest incorrect application of gift tax rules and provides IRS-compliant alternatives. It even generates specific references to IRS publications that explain why certain deductions are or aren't allowed.

How does this service actually work? I've tried calling the IRS multiple times and always give up after being on hold forever.

Sorry, but this sounds too good to be true. The IRS is notoriously impossible to reach. You're telling me some random service can magically get you through when millions of people can't even get past the hold music?

The service basically works by using an automated system that navigates the IRS phone tree and waits on hold for you. When they reach a live agent, you get a call connecting you directly to that agent. It's like having someone else wait in line for you, then calling you when it's your turn. I was incredibly skeptical too - I had spent over 3 hours on hold previously without reaching anyone. With Claimyr, I got a call back in about 15 minutes connecting me directly to an IRS representative who answered my gift tax question immediately. The IRS phone system is actually designed to only allow a certain number of calls in queue, so most callers get busy signals or disconnected. This service has a system that persistently tries to get through those barriers.

That's an excellent point about possibly getting outdated advice. She mentioned getting this information from "her tax guy" who I suspect might be someone she's been using for decades. Where can I find that IRS publication online to show her? And is there a specific section that directly addresses this gift vs income deduction issue?

You can find Publication 559 directly on the IRS website (irs.gov), but the publication that most directly addresses gift taxes is actually Publication 950 "Introduction to Estate and Gift Taxes." Look specifically at the section titled "Gift Tax" which clearly explains that gifts aren't income tax deductible. Another helpful resource is the IRS's FAQ page on gift taxes which explicitly states that gifts to individuals don't qualify as income tax deductions. Showing her these official sources should help, especially if her tax preparer is giving outdated or incorrect advice. If she's been doing this for years, she might want to consult with a different tax professional to see if amended returns are necessary.

Did your aunt have to file amended returns for all those years or did the IRS just assess the additional tax? I'm worried about my parents who might have been doing something similar.