This year Alex's friend Kimberly was disabled. Alex paid $30,000 to Kimberly's doctor for medical expenses. In addition, Alex also paid $25,000 to Kimberly directly so that her son could afford tuition at State University this year. Has Alex made taxable gifts, and if so, in what amounts?
What will be an ideal response?
The payment to Kimberly was a taxable gift of $10,000.
Both payments were complete gifts, but payments for medical expenses and education are exempt from the gift tax as long as the payments were made directly to the college or doctor. The gift to Kimberly is taxable because the amount of $25,000 exceeds the 2019 annual exclusion of $15,000 by $10,000 and the gift was not made directly to the college.
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