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No. of Recommendations: 3
hfk1980 writes (in part):

While, your parents live in a state that gives income tax deductions for 529, they are missing out on the IRS GIFT Tax, which for 2020 is $15,000 per person it is given to. Meaning, while it cannot be deducted from their income tax, it can be deducted from their federal taxes. Per

I reply:

You appear to misunderstand how the unified gift and estate tax works, at least at the federal level. Gifts are not deducted from your income (nor are they income to the recipient). You can give away up to the annual limit without eventually affecting your estate taxes. If you exceed your annual limit (after using techniques such as having both you and your spouse contribute the annual limit to both parents), then you start eating up the exclusion that will reduce or eliminate your estate taxes. If you give away so much money that you eat up the entire exclusion, then you'll start owing gift tax on what you give away.
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