Parents Sponsor...

[tooootsie]

Anyone know how it works if someone decides to "sponsor" your child(ren)?
I have an older sister who owns her own business. She would like to sponsor my daughters gymnastics costs, but she wants to make sure that it is tax deductible? Does anyone know?

 

[Geoffrey Taucer]

No idea.

You should also check any relevant NCAA regulations; this may cause them to be considered "pro athletes," which (I believe) means they would lose their NCAA eligibility.

 

[tooootsie]

They are only 4 and 6... I work for my sister and she wants to help us out. Maybe she will have to figure it out differently?

 

[Gymdad2]

Be sure to check with an attorney familiar with the NCAA regulations. You might be in violation of NCAA by-laws. Good luck.

 

[kayjaybe]

I don't think it can be tax deductible without her being a non-profit organization, which I assume your dd is not. Most gyms are for-profit, so paying the fees to the gym wouldn't be tax deductible. If they are on a team and the team is non-profit, she could make a donation to the team, but can't designate that it specifically is for your girls.

 

[tooootsie]

Hmmm, We might have to figure a better way for this out. I would love to save a little money if possible.

 

[kayjaybe]

This doesn't mean that she can't pay for your child's lessons. She can certainly give you that gift. I just don't see any way it can be tax-deductible.

 

[tooootsie]

Yah, I see what you are saying. I think she will still do it, Id love to save the $350 a month if she is willing

 

[Geoffrey Taucer]

Whatever the case, check NCAA regulations before you accept anything. I'm sure there are ways for her to help out that wouldn't violate NCAA regulations, but make sure you know your way around those rules first.

 

[tooootsie]

Where can I look up those rules?

 

[mommyof1]

I don't think it can be tax deductible without her being a non-profit organization, which I assume your dd is not. Most gyms are for-profit, so paying the fees to the gym wouldn't be tax deductible. If they are on a team and the team is non-profit, she could make a donation to the team, but can't designate that it specifically is for your girls.

I am not a tax attorney, but the sister may be thinking it's tax deductible as a business expense for advertising, like sponsoring a Little League team.

 

[MaryA]

Whatever the case, check NCAA regulations before you accept anything. I'm sure there are ways for her to help out that wouldn't violate NCAA regulations, but make sure you know your way around those rules first.

Really? My mom pays my daughter's meet fees. I can't imagine having a family member help out can affect their NCAA eligibility. That has got to be pretty common.

 

[HoldThePhone]

Really? My mom pays my daughter's meet fees. I can't imagine having a family member help out can affect their NCAA eligibility. That has got to be pretty common.

I think it's different if it's just a sister or grandparent helping out, but if she's doing it through her business that changes things.

 

[gwenmom]

They could be tax deductible as a business expense if you are willing to consider it part of your wages and be taxed on it. Basically you get a raise

 

[gwenmom]

I am not a tax attorney, but the sister may be thinking it's tax deductible as a business expense for advertising, like sponsoring a Little League team.

Little league teams do put the sponsors name on jerseys and banner. Unless your DD can do this ( and the gym agrees) it is not advertising expense. And even if you do then you are jeopardizing their amateur status. Little League is a not for profit so it is the league that receives the sponsorships, not the individual kids

 

[Gymdad2]

Just to make this more complicated - lol - if you receive the money as a gift or as wages from your sister, then it will need to be reported on your federal (and maybe state) tax returns if it is over a certain amount. Not sure what that level is now, but you need to check this out. You can find the ncaa rules on line (I have looked at them before and they are complicated to say the least) and that's why I suggested asking somebody will expert knowledge. It will cost you something probably, but that would be a small price to pay for assuring your dd's ncaa eligibility. Good luck.

 

[tooootsie]

Cripes this is complicated... I might just have her give me a raise to pay this... Or what if she pays monthly but does a deduction from my paycheck for it, not pre-tax? Or something like that? I don't know. I am just trying to figure this out.

 

[mommyof1]

Little league teams do put the sponsors name on jerseys and banner. Unless your DD can do this ( and the gym agrees) it is not advertising expense. And even if you do then you are jeopardizing their amateur status. Little League is a not for profit so it is the league that receives the sponsorships, not the individual kids

Yes--I should have been clearer--it sounds like the aunt is assuming it is analagous to sponsoring a youth sports team that acknowledges the sponsors, but it would not work for an individual gymnast unless "Auntie Em's Pies" is embroidered on her leo (which would cause other issues).

 

[bookworm]

Cripes this is complicated... I might just have her give me a raise to pay this... Or what if she pays monthly but does a deduction from my paycheck for it, not pre-tax? Or something like that? I don't know. I am just trying to figure this out.

For starters , I would avoid the word "SPONSOR" like the plague because nothing good will come of that. I would try to get your sister to give the money to you directly (whether as a wage increase or gift) and write the checks for gym from your own account. Any type of "sponsorship" or "donations" have to be made to the whole team or gym, and not just your daughter ...especially if you are going the tax deduction route. And be careful too because say your sister does end up "sponsoring" your daughters in gymnastics and down the road , they switch sports and become fantastic swimmers and look to go to college on a full ride for swim...taking money in ANY SPORT will harm their eligibility.

 

[gwenmom]

Cripes this is complicated... I might just have her give me a raise to pay this... Or what if she pays monthly but does a deduction from my paycheck for it, not pre-tax? Or something like that? I don't know. I am just trying to figure this out.

If she does it pre-tax you will end up with a tax bill when you file your tax return because if she deduct pretax it is still taxable income.

If she gives the money directly to you it is considered a gift and not taxable to you but also not deductible to her.