3 Strategies For Financial Gift-Giving

You have chosen someone to whom you want to give a financial gift. It may be a gift of appreciated stocks or mutual funds, or you offer a lump sum to someone working through personal issues. No matter what your intentions are, there are some common strategies for making your gift more meaningful.

Give appreciated stocks or mutual funds

There are several options if you’re interested in giving appreciated stocks or mutual funds as a financial gift. These can include gifting through a brokerage account, through a mutual fund, or by mailing the shares. There are perks for the giver and recipient, and donating stock can effectively provide a lifetime income stream.

A tax advisor can help you choose your situation’s best option. They can forecast the tax effects of choices and model various options for you. Giving appreciated securities can also help you avoid capital gains taxes.

When you’re donating appreciated stocks or mutual funds, you’ll want to keep a record of your gifts. This is especially important if you are giving large amounts. Then, you can use the documents to calculate the estate’s value.

In addition to a tax advantage, you can make a difference in the world by donating your stocks to a charitable organization. Gifts of securities are accepted by many organizations and are a great way to diversify your portfolio.

Earmark funds for education or medical expenses

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Split a more significant gift by giving only $17,000 to your child and any additional amounts to her spouse

If you consider giving your child a significant gift, consider splitting it with her spouse. This will allow you to claim the $17,000 per year limit on contributions and avoid any taxes you might owe for the money you are giving.

However, you should be aware of the federal gift tax. You are responsible for reporting all gifts you give, even if they do not owe the federal gift tax. You must file Form 709 by April 15 of the following year.

The gift tax is different from the income tax. Although gifts are not taxable income, there are tax penalties for those who exceed certain levels. These penalties are usually triggered if the gift is too large. Fortunately, the government does not levy this tax on ordinary property.

However, you will need to pay the gift tax if you make any gifts above the $15,000 per year limit. To do so, you will need to fill out Form 709.

This is one of the more complex forms you can file, so you will want to use a service such as TurboTax to prepare your tax return. It will ask basic questions about your life and automatically fill in all the proper tax forms.