Creative Gifting

Gifting allows flexibility to shift income or deductions between individuals.  I will briefly mention 2 gifting strategies:

  • Presume that you are don’t have enough itemized deductions to itemize, and are in a low tax bracket.  If you want to make a donation to a charity but can’t benefit from the deduction, then gift the funds to a friend who can benefit from the deduction.  The friend can make the donation to the charity and utilize the deduction.  In order for the gift to be legitimate, you can have no control over the money once you make the gift to your friend.  If the friend decides not to donate it, there’s nothing you can do – except leave that friend off of your Christmas card list.
  • Presume that you want to gift money to your child to use as a down-payment on their house.  Instead of gifting cash, you can gift appreciated securities to your child.  The child will sell the appreciated securities and be taxed on the gain at their lower tax bracket.  As the stock market continues to heat up, this may be a timely strategy to get some gains off of your plate.