Paying Medical Expenses or Tuition Costs Tax Free from Gift Tax

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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UPDATED: Jun 19, 2018

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In addition to the $15,000 annual Gift Tax exclusion, there is a 100% exclusion when you make direct payments FOR someone’s medical bills or tuition expenses as a gift. Both the medical and educational exclusions are allowed without regard to the relationship—so the recipient need not be a close relative or your dependent. The payments must be made directly to the health care provider or to the educational institution. Payments to the recipient cancels the tax benefit. Room and board, supplies, books and other fees do not qualify.

A qualifying educational organization is one that normally maintains a regular faculty and curriculum and normally has a regularly enrolled body of pupils or students.

Medical care includes expenses for diagnosis, cure, mitigation, treatment, or prevention of disease, or for the purpose of affecting any structure or function of the body, or for transportation. It also includes medical insurance.

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