Gifting money to loved ones is the best way to show you care when you can’t be there in person. Whether it’s a small amount for a birthday or a large sum to help pay for necessities, when you gift money, you give peace of mind.
Each year, gifting money helps millions of people pay for goods and services. It changes circumstances for the better and has a profound influence on those who receive it. In the past, gifting money almost always required a visit to your loved one in person. But now, with online gift-giving platforms, e-commerce, and digital money transfer services, it’s easy to send gifts to loved ones without the limitations of borders and currencies.
What should you know about how to gift money to a loved one? Let’s discuss, so you know what to expect.
What is considered a gift?
Gifting money comes in many forms. Sending funds to help a loved one cover rent, recover after an injury, or make a down payment on a home can all be considered gifts.
Put simply, if the money you are sending did not come from an activity that produced income (such as work, a temporary gig, or hired help), it can be classified as a gift. If you can tie a gift to a job or specific payment, it is not a gift.
If the monetary gift came from a need to help, a desire to do good, it is a gift.
Ask the question of “why” you are giving money when trying to determine if the funds qualify. Will the gift make a profit or earn income back? Or was it sent purely for the sake of lending a helping hand?
Is gifting money taxable?
Check tax information with a tax professional before arranging a money transfer.
Every country has its own set of rules that apply to gifting money.
How much money can I gift someone?
There are parameters to keep in mind when gifting money, so we recommend researching regularly since parameters can change. When you give a monetary gift in the United States, you can essentially gift as much money as you’d like, tax-free, as long as your recipient isn’t earning income from the gift. As we mentioned, your recipient will need to pay taxes on any income earned as a result of the gifted funds.
Why you can essentially gift as much money as you’d like in the United States, anything gifted over $15,000 will need to be reported to the IRS and you’ll have to complete Form 709. The United States also has a lifetime exemption of $11.58 million, meaning once you gift this amount, you will have to pay taxes.
How to gift money
In an era of fraud, identity theft, and a global pandemic, knowing how to gift money to loved ones safely is more important than ever. Here are some common methods, and perhaps some ideas you may have not yet considered:
- Cash: Good, old fashioned cash. Tuck dollars into a greeting card or hand-deliver over celebrations if you live nearby—you can’t go wrong with gifting cash to your loved ones.
- Gift cards: Gift cards are a tried-and-true way to gift money. If you know your receiver well enough, you can send them a gift card to a store or restaurant they like. And if you’re not sure, Amazon and Visa gift cards are always a safe bet.
- Certificate of deposits (CDs): CDs can be a great gift that will grow year after year. Even better, CDs can serve as a teaching tool for children, teenagers, and young adults who could benefit from learning the importance of saving money.
Make gifting money simple with Western Union
Long gone are the days of being limited by borders and currencies. With online gift-giving platforms, e-commerce, and digital money transfer services like Western Union, gifting money is fast, simple, and convenient.
With convenient ways to send money online, with the app, or from hundreds of thousands of agent locations worldwide, Western Union can help you gift money today. So, go on—send money now to cover your niece’s dance lessons. Transfer funds to help your dad celebrate his retirement. Or send cash for fast pick-up to a loved one across the globe. Your options for gifting are endless.
