Gifts for Friends and Family Investopedia

Financial gifts can be generous contributions to friends and family or even a generous contribution to your own retirement. Each has potential benefits and drawbacks that you should be considering before you start stuffing those gift money envelopes. When you give funds however it s critical to know your limits so you avoid penalties for your largesse. A direct contribution loophole however lets you pay for another s education or medical care. Securities are considered property so the same gift tax that applies to cash can apply here as well. A few online sites let you buy one share of stock and send the stock as a framed certificate. A conservative securities option is to buy U. savings bonds which you can buy directly from the Treasury at no fee. The annual limit for buying bonds is per Social Security number per bond type. To buy bonds electronically you and your recipient must have TreasuryDirect accounts. Gifts to Yourself Taking care ofNo. should be! a priority during the holidays. You can contribute to more than one retirement plan with each type specifying different contribution limits. You can participate in an employer sponsored plan as well as in either a Traditional or Roth IRA . Contribution rules are governed by your taxable income your age and the specific types of accounts you hold. Ultimately the more money you can contribute the more of your own money you keep. A simple calculation shows how compound interest works in your favor. to the twentieth power Future Amount x . Business Deductions Treat yourself to some travel away from home and you could deduct certain expenses from your taxes. Deductible expenses can include transportation car rental lodging and meals and even tips. You can deduct all business related travel expenses such as traveling to and from the destination. You can deduct the expenses of the meeting only. As with typical business travel the cruise must meet specific requirements ! and you will need meticulous documentation. You may also have! to show paperwork from the organization verifying that ithas received the amount donated. To donate securities you musthold them for more than a year. But if youtransfer the shares directly to the charity you avoid capital gains. You also get to take a charitable income tax deduction for the full market value of the stock. As a bonus the donation gives your recipient the warm fuzzies and you get the tax deduction.

Source: http://www.investopedia.com/articles/pf/07/holiday-cheer.asp


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