Con­sider fi­nan­cial gifts to fam­ily

The Covington News - - Business -

At this time of year, you may be think­ing about find­ing the “ per­fect” gifts for var­i­ous fam­ily mem­bers. You can find any num­ber of thought­ful presents, but if you’d like to give some­thing that can have an im­pact long af­ter the hol­i­day sea­son is over, con­sider mak­ing a fi­nan­cial gift.

You could, of course, just write a check. But you may be able to do more for your in­tended re­cip­i­ents by find­ing a more creative gift. Here are a few pos­si­bil­i­ties:

Stocks — Many peo­ple have pref­er­ences for prod­ucts made by cer­tain com­pa­nies — and they may well en­joy own­ing the stocks of those firms. Why not sur­prise your fam­ily mem­bers with a few shares of th­ese stocks? If you de­cide to give shares from your own port­fo­lio, you’ll need to know what you orig­i­nally paid for the stock, how long you’ve held it and its fair mar­ket value at the date of the gift. Re­cip­i­ents of your gift will need this in­for­ma­tion to de­ter­mine gains or losses if they de­cide to sell the stock. You’ll also need to de­ter­mine if you have to pay gift taxes. You can give up to $ 12,000 per year, free of gift taxes, to as many peo­ple as you want; over your life­time, you can give up to $ 1 mil­lion without in­cur­ring gift taxes.

Con­tri­bu­tions to Sec­tion 529 plans — Over the past sev­eral years, col­lege tu­ition costs have in­creased sig­nif­i­cantly. If you have a child ( or grand­child) who will be headed off to col­lege in a few years, you may want to open a Sec­tion 529 col­lege sav­ings plan. The con­tri­bu­tion lim­its are typ­i­cally quite high for this type of ac­count, and your con­tri­bu­tions may be tax-de­ductible if you are par­tic­i­pat­ing in your own state’s plan. Plus, your earn­ings and with­drawals will be ex­empt from fed­eral taxes as long as the money goes to­ward pay­ing qual­i­fied higher ed­u­ca­tion ex­penses. ( How­ever, with­drawals used for any other ex­penses may be sub­ject to fed­eral, state and penalty taxes.)

Con­tri­bu­tions to an IRA — Many peo­ple don’t fully fund their IRA each year — so any help you can give to­ward that goal will be im­por­tant. While you can’t con­trib­ute di­rectly to some­one else’s IRA, you can write a check to the re­cip­i­ent for that pur­pose. For the 2008 tax year, the IRA con­tri­bu­tion limit is $ 5,000 ($ 6,000 for in­vestors who are 50 or older). And the dead­line for mak­ing con­tri­bu­tions for 2008 isn’t un­til April 15, 2009.

Char­i­ta­ble gifts — You may want to make a fi­nan­cial gift to a char­i­ta­ble or­ga­ni­za­tion in the name of a loved one. If this per­son sup­ports the work done by the char­i­ta­ble group, he or she will greatly ap­pre­ci­ate your thought­ful­ness. Fur­ther­more, you’ll get an im­me­di­ate tax de­duc­tion for your gift, as long as the group has re­ceived 501( c)( 3) tax-ex­empt sta­tus.

By mak­ing any of th­ese gifts, you’ll brighten your fam­ily mem­bers’ hol­i­days — and you’ll know that your gen­eros­ity truly had an im­pact on their lives.

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