I’m not sure if this is true. The annual gift limit is $11,000 per year. If someone gave you $5,000 per year, claimed it was a gift out of the goodness of their heart, but it was actually compensation for work done for them, the IRS would demand tax on that money if you were caught. Probably fines too. Volunteering is legal. Gifts are legal. But the combination of the two would likely be seen as taxable.
Same thing with your tuition dodge. They may see the gift as not freely made, but as compensation for the payment of tuition. They might demand payment, fines, and you’ll end up on their audit shitlist for a decade.
Give another example. Is a donation to a charity really a donation to a charity if the charity kicks you back the exact same amount in cash? IRS would likely say “hellz to the no.”
Now the gray area would be barter. What if you paid $5000 of tuition for the student and their family gave you a used car worth roughly $5000 as a gift?
