“Some gifts are big. Others are small. But the ones that come from the heart are the best gifts of all.”
Tax-efficient gifting options
I am not a very good runner. I blame it on short legs. My doctor would say the extra 20 pounds doesn’t help either.
One of my favorite runs is the Cooper River Bridge run in Charleston, SC. I would get passed by hundreds of people. Where I would make up a lot of ground is on the downhill parts of the bridge. I keep my body perpendicular to the road and “fall downhill,” letting my feet kick behind me. I was able to blow past the people that were leaning back and resisting this downhill portion.
Many people do not use the “downhill portions” of gifting as well as they should either.
They miss tax planning opportunities that cost them thousands of dollars.
You can give a friend or family member $19,000 in 2025 without filing a gift tax return and without reducing your lifetime exemption amount.
You can give an unlimited amount if you pay:
- Tuition directly to an educational institution.
- Medical expenses directly to a medical provider.
Let’s say you wanted to give $30,000 to your child. How could you do it?
- You could gift across multiple years. You give $19,000 in December 2025 and $11,000 in January 2026.
- You could give $15,000 to your son and $15,000 to your daughter-in-law (if married).
- You and your spouse could give $15,000 each to your child. It is recommended that you write the checks from your individual accounts.
If you are giving to charity, then a few strategies may be utilized.
If you are giving from a taxable account, give low-cost basis stock. The charity can sell the stock without capital gains tax, and you donate the fair market value.
If you are over 70 and half years old, then you could give directly from your IRA to charity. This kind of withdrawal is NOT taxable. This counts towards your Required Minimum Distributions if you are of age. This is called a Qualified Charitable Distribution.
We caught a couple of mistakes on the Social Security video we posted on Saturday. We also posted a Case Study on How to Retire with $2M. Let me know what you think.
This week, we were highlighted in Financial Advisor Magazine for our coverage of the Social Security Fairness Act. We’ve created a video that dives deeper into this Social Security reform, which eliminates the Windfall Elimination Provision (WEP) and Government Pension Offset (GPO), leading to increased benefits. Be sure to subscribe to our YouTube channel so you won’t miss the release of this important video!
On the lighter side, it had been a few weeks since we saw Elliott. So, we went to Columbia Friday and took him out for a steak. I think that was the first meal he has eaten that he did not order by number since school started. Kids….
