Help pack a million meals for struggling seniors on 9-11. Volunteer today



Driver Safety

Piggy bank on the road - AARP Driver Safety

Take the new AARP Smart Driver Course!

Happy African American couple

AARP Books

Visit the Books Section

Enjoy titles on retirement, Social Security, and becoming debt-free.

Jobs You Might Like

most popular


Five Tax-Smart Ways to Help the Next Generation

young african american couple

— Rubberball/Getty Images

Want to help your kids and grandkids in ways that provide the greatest benefit from federal tax laws? Here are some tips:

  1. The annual gift tax exclusion for each person-to-person gift is $13,000. That means you and your spouse can each give your son and daughter-in-law $13,000 each per year, for a total of $52,000 a year, before hitting the gift tax limit.
  2. If you’re paying for a grandchild’s college, send the check directly to the school so it won’t count against the annual gift exclusion. If the parents earn less than $160,000 ($80,000 for single filers), they can qualify for the new $2,500 American Opportunity Credit, a tax credit for educational expenses. In that case, it might make more sense to give them the money and let them pay the bill.
  3. Gifts to cover medical bills follow the same rules as those for education expenses. If you pay the doctor or hospital directly, it won’t count against your annual or lifetime gift limit.
  4. If you have a winning investment, it may be beneficial to give your kids or grandkids shares to sell. Because of changes in the kiddie-tax rules, this strategy works best for young adults over the age of 19 (or over the age of 24 if they’re full-time students). If they earn under $33,950 ($67,900 for joint filers), including the gain on the sale of that security, they could qualify for the zero percent capital gains tax rate in effect in 2009.
  5. With today’s stricter lending standards, giving money for a down payment may not help young homebuyers qualify for a loan. Instead, issue the mortgage yourself, suggests Maureen McGetrick, a tax partner with BDO Seidman, a New York accounting firm. If you charge at least the market rate of interest—roughly 4.5 percent today—and structure the loan as a real mortgage, your kids can still write off their mortgage interest. You can give them a break on closing costs. Plus, you’ll keep the money in the family, and earn a bank-beating rate of return yourself.


Linda Stern writes on taxes for the AARP Bulletin.

Topic Alerts

You can get weekly email alerts on the topics below. Just click “Follow.”

Manage Alerts


Please wait...

progress bar, please wait

Tell Us WhatYou Think

Please leave your comment below.


The Cheap Life

Jeff Yeager Cheap Life Ultimate Cheapskate AARP YouTube web series save money

Catch the latest episode of The Cheap Life starring Jeff Yeager, AARP's Ultimate Cheapskate. Watch

Discounts & Benefits

From companies that meet the high standards of service and quality set by AARP.

Member Benefits HomeServe

Members can protect their homes with comprehensive repair plans from HomeServe.

AARP Credit card from Chase

Members can get cash back rewards on purchases with the AARP® Credit Card from Chase.

Woman holding smartphone in city, Google map tool

Members can find discounts on the go via the AARP® Member Advantages Offer Finder app.

Member Benefits

Join or renew today! AARP members receive exclusive member benefits & affect social change.

Rewards for Good

Your Points Balance:

Learn More

Earn points for completing free online activities designed to enrich your life.

Find more ways to earn points

Redeem your points to save on merchandise, travel, and more.

Find more ways to redeem points


Advance your skills. Transform your career.

Explore your learning possibilities.