What’s in The Catalog?

K-B Toys, Borders Books & Music, and Circuit City are names we used to hear. What did all these stores have in common? In the past, these stores released holiday catalogs so you could find the gifts you wanted. I say in the past because you may have once purchased gifts for family or friends from them, but unfortunately, you will no longer be able to, as each of these stores no longer exists.

How we all shop has changed dramatically thanks to the Internet. When you have pre-school aged children knowing what Amazon is, you know the retail landscape has changed. With the holidays upon us, it made me look back to those catalogs of yesteryear and seemingly “simpler” times. Just as I was thinking about this, lo and behold, a printed catalog from Amazon arrived filled with pictures and descriptions of the latest and greatest toys. This catalog is very popular in our house!

As we age, how we give and receive gifts tends to change. Gift giving becomes more about giving a gift rather than receiving one and making the gift given more meaningful. Over this week, I have had some conversations concerning gift giving and more specifically giving monetary gifts. The most common question has been, how much can one give without having to file a gift tax return?

Everyone can gift $15,000 to as many individuals as they would like this year without paying a gift tax or decreasing the lifetime estate tax exclusion. If single, this means, for example, you can give $15,000 to four children totaling $60,000 with no gift tax. For couples, this means each spouse can give $15,000 which combined equals $30,000 to as many people as they would like. If you have additional questions, please let us know. Also, since I am not giving tax advice to your specific situation, if you have specific questions about your tax situation and gifting, please contact your tax professional.

While the amount of money one can give without a gift tax return is straightforward, some clients worry about giving money to family and then not really knowing what the money is going to be used for. This is a common worry and understandable. For example, a family member may have some outstanding educational expenses, yet there is worry if any money given will go toward paying the education expenses or rather will it go toward purchasing some desire like a new outfit or stereo.

Many individuals first think of helping other family members with expenses that involve needs, rather than paying for desires or wants. We have found some ways to help family members without giving them cash which can help alleviate any worries on how the money will be spent. Some examples include:

  • If wanting to help with education, consider paying for school expenses directly to the school or putting money into a 529 plan.
  • If worried about bills, work with the recipient to get the account information and send the money directly to the company. This can include medical and dental expenses for example.
  • Look to contribute to a current retirement plan or help them open an Individual Retirement Account.

These are just a few ideas if you are considering helping family members financially. If you think you may want to gift any money before year end, please give us a call so as we can talk through different scenarios as well as have enough time to make a distributions if needed.

Have a great weekend.

Chris

Chris Zeches, CFP®
Managing Partner