Are direct medical or tuition payments treated like cash gifts?

Not always. Direct payments can receive different gift-tax treatment when they are paid to the qualifying provider or school.

Example:

• Omar Grant gives his niece 6,000 for living expenses.
• He separately pays 11,000 directly to her college for tuition.
• He also pays a hospital directly for a qualifying medical bill.

The cash support is analyzed under the normal gift rules. The direct tuition and medical payments may be excluded from taxable gifts if the requirements are met.

The key exam detail is who was paid. Money handed to the relative is not the same as money paid directly to a qualifying school or medical provider.