Tuition gift falls into
the nontaxable category
A: The IRS does consider paying tuition directly to the school a gift — just not a taxable one for either the giver or the recipient. There are several other gifts that fall under the nontaxable category: medical bills that are paid directly to a health care provider for someone else, gifts to a spouse, and gifts to a political organization for its use.
None are subjected to the annual gift tax exclusion of $15,000 per person.
A: Unfortunately, you can’t file a restricted application, which lets a beneficiary file for spousal benefits, allowing his or her own benefit to grow 8% per year until age 70 while still receiving some benefits now. This claiming strategy for boosting retirement income is no longer an option for anyone born after Jan. 2, 1954.
Now, when beneficiaries born after that date apply for Social Security, they will be given whichever is greater: the amount based on their own work history, or 50% of the spouse’s monthly benefit.
A: You do not have to take the whole distribution this year. Because there are no RMDs in 2020, the partial distribution you take isn’t technically an RMD. Instead, it’s considered a voluntary withdrawal so the amount you take this year can be as much or as little as you choose.