If you're currently evaluating financial aid awards for your college-bound child, it's important to understand what types of assistance are taxable. In general, free-money scholarships, fellowships, grants and tuition "discounts" are nontaxable. However, they must be used according to their designations — for example, for tuition, books and educational materials.
Work-study compensation (even if referred to as "scholarships" or "fellowships"), on the other hand, must be reported on the student's federal income tax return. But, depending on total income and other factors, your child may not owe tax on these amounts. If you have questions, your tax advisor can provide guidance.
Estate planning is different these days. With a historically high gift and estate tax exemption, most families are unlikely to face federal gift or estate tax liability. This makes it critical to understand the income tax impact of asset transfers, including the stepped-up basis rules.
Generally, for people inheriting appreciated assets (such as stock, real estate and business interests), the tax basis for calculating gain when the assets are sold is "stepped up" to their value on the deceased's date of death. This can significantly reduce or eliminate capital gains tax for heirs, while lifetime gifts don't get a stepped-up basis. Contact your tax advisor for help crafting a tax-efficient estate plan.
Beginning this year, a 1% excise tax applies to certain remittance transfers from U.S. senders to recipients in foreign countries. Remittance transfer providers must collect these remittance transfer taxes from senders and pay them to the IRS.
Specifically, the tax is levied when remittances are sent from the U.S. to recipients in foreign countries if the sender provides cash, a money order, a cashier's check or another similar physical instrument to the remittance transfer provider. The IRS has issued proposed regulations that, among other things, specify the amount on which the remittance transfer tax is imposed and determine the full scope of physical instruments that trigger the tax.
The IRS now offers a new online Tax Debt Help tool on IRS.gov to make addressing outstanding tax balances easier. The free resource uses interactive questions to help taxpayers understand their situation and see payment or resolution options. Those options may include installment plans, temporary pauses in collections or offers in compromise for eligible taxpayers.
The tool is part of the IRS's push to expand digital services and improve the taxpayer experience. If you have a balance due, this tool can be a helpful starting point. If you have questions, contact your tax advisor.
Eligible individuals and their family members with disabilities can use tax-advantaged Achieving a Better Life Experience (ABLE) accounts to fund qualified disability expenses. The beneficiary must have become blind or disabled before age 46 (up from age 26 before 2026). Qualified expenses include housing, education, transportation and basic living expenses.
For 2026, the ABLE account annual rollover and contribution limit is $20,000. The One Big Beautiful Bill Act made permanent the ability to roll over 529 plan funds to an ABLE account without penalty, as long as the ABLE account is owned by the beneficiary of the 529 plan or a member of the beneficiary's family.
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