Dear Liz: You recently answered questions about tax breaks for college education expenses. We are contributing $20,000 to our grandson's college education yearly. He is not our dependent. We are senior citizens with a gross income of about $110,000. Is there any deduction for this expenditure that we might qualify for?
Answer: Your grandson is a lucky young man. Since he's not your dependent, though, you can't take any of the available education tax credits or deductions.
The good news is that you don't have to worry about filing gift tax returns. Each person is allowed to give any other person up to a certain limit each year without triggering the need to file such returns.
FOR THE RECORD:
Personal finance: In the Aug. 22 Business section, the Money Talk column said the IRS allows an individual to make an annual gift of up to $15,000 without having to file a gift tax return. The annual gift exclusion for 2015 is $14,000. —
This amount, called the annual gift exclusion, is $15,000 this year. Together, you and your spouse could gift up to $30,000 to one person. You wouldn't actually owe gift taxes until the amounts exceeding this annual exclusion totaled $10.86 million as a couple.
Even if you were giving more than $30,000, there would be a way to avoid filing gift tax returns, and that's to pay the college directly. Amounts you pay directly to a college or to medical provider are exempt from the limits.
Social Security spousal and survivor's benefits
Dear Liz: My ex-wife and I were married for 12 years. She is 55. I am 64 and collecting Social Security. At what age can she apply for spousal benefits?
Answer: If she doesn't remarry, she can apply for spousal benefits as early as age 62. If she applies early, though, she would lose the option to switch to her own benefit later if it's larger.
To preserve that option, she would need to wait until her own full retirement age, which is 67 for those born in 1960 and later.
Dear Liz: My husband is 68 and I am 59. My husband is deferring his Social Security to age 70 to get the largest amount. If he predeceases me, at what age would I be eligible for 100% of my husband's current Social Security benefit? Would I have to wait to age 66 for that benefit?
Answer: If your husband should die, you could apply for survivor's benefits as early as age 60 (or 50 if you are disabled). Your benefit would be reduced to reflect the early start. To get 100% of your husband's benefit, you typically would have to wait until your own full retirement age. If you were born in 1956, that would be 66 and four months.
There's a wrinkle here, though. By waiting to start his benefit, your husband is earning what are known as delayed retirement credits that increase his benefit by 8% annually (or two-thirds of 1% each month). Your survivor's benefit would be based on the benefit he's earned, including the delayed retirement credits, even if he should die before age 70. So at least some of the effect of your early start would be offset by the fact that he delayed benefits.
If your husband had started benefits early, by contrast, your survivor's benefit would have been based on that permanently reduced amount. By waiting, your husband is ensuring that you will get the largest survivor benefit possible while increasing the odds that you as a couple will get the most out of Social Security.
Two-year degrees can pay off
Dear Liz: Please continue to encourage people to look into two-year technical degrees. I got my associate's degree in mechanical engineering and in my first job earned more than my father.
Later I worked for a company that made touch-screen point-of-sale terminals. Time and time again, I trained waiters who had bachelor's or master's degrees but couldn't find better jobs. I now work for a large computer company and have folks sitting around me with those same higher degrees.
Answer: On average, people with two-year degrees are paid less than the average four-year degree holder. One in four people with associate's degrees, however, earns more, according to the Bureau of Labor Statistics.
These jobs are often in the technical and health fields. Four of the BLS' 30 fastest-growing job categories require two-year degrees. Those positions include dental hygienist (median annual earnings of $70,210), diagnostic medical sonographers ($65,860), occupational therapy assistants ($53,240) and physical therapist assistant ($52,160).
Other well-paying jobs with good growth prospects requiring two-year degrees include funeral service managers ($66,720), Web developers ($62,500), electrical and electronics drafters ($55,700), nuclear technicians ($69,060), radiation therapists ($77,560), respiratory therapists ($55,870), registered nurses ($65,470), cardiovascular technologists and technicians ($52,070), radiologic technologists ($54,620) and magnetic resonance imaging technologists ($65,360).