Traditionally, people make donations to their favorite charities and exchange gifts with family and friends during the holiday season. But is this really the best time to give? In this blog post, we will explore the various aspects of Christian giving during the holidays, such as family giving, recurring giving, and taxes. 

We will consider whether there are any particular tax implications or benefits specific to giving during the holiday season and discuss the potential benefits of reinforcing bonds with family and friends. 

Giving to Family

The holidays are a great time to show your family and friends how much you care by expressing our gratitude. It is a made-to-order opportunity to strengthen the bond between you and your loved ones. 

Why is it Important to Give During the Holidays?

The holidays are a particular time of year when it can be important to show our love and appreciation for those who mean the most to us. That doesn't necessarily mean one must show this love by providing gifts, but giving during this time of year can be one way to express gratitude and show how much we care. Our giving can take many forms, from tangible items to intangible acts of kindness. For those looking to give financially, there are a few things to keep in mind, especially when it comes to taxes. 

The gift tax limit for 2022 is $16,000 per person ($32,000 per married couple). This means that a person can give up to $16,000 worth of gifts to a loved one without having to report the gift to the IRS. If you plan on giving more than the annual gift tax limit to an individual person, it’s important to be aware of the tax implications. 

Giving during the holidays is — of course — more about showing love and appreciation for the people who matter most than it is about taxes. Taking the time to think about meaningful gifts or thoughtful acts of kindness can make all the difference in someone’s holiday season. Whether you give a physical item or an intangible gesture of kindness, giving during the holidays is an important way to show our appreciation for those we care about.

What to Consider When Giving to Family Members

When it comes to giving to family members during the holidays, keep in mind these important considerations:

Children learn to give by watching you. It’s not so surprising that your children are watching and learning from you. Proverbs 20:7 says, "The righteous man leads a blameless life; blessed are his children after him." The children are blessed in part because of the role model they had. Children often learn from their parents, using them as examples to model their own behavior. If you're generous, your children have the opportunity to see the joy of giving in you. They can help give, too. For example, you can help younger kids select a toy to give to a local toy drive. Older kids and teens can give part of their allowance to a charity. You may even serve together at a local church event. Proverbs 20:7 reminds us that “The righteous man leads a blameless life; blessed are his children after him.” Our children are watching and often using us as an example of what behavior to model. 

Give your time as well as your treasure. Your acts of service may mean more to your family than physical items. Time is often one of our most valuable commodities, like with our money; how we choose to spend it can reflect what we value most. Carve out some of your time to be present with your family. Plan an extra family dinner or game night. You could also volunteer together, take a class, attend a sporting event, or go to the movies as a family.

In some cases, your state tax policy may affect how much you can give before you need to report it  to the state. Some states have specific regulations that govern how much you can give without triggering a state gift tax. - California is not one of them. Currently, California does not have an estate, gift, or inheritance tax.  Be sure to check with your state’s laws before giving any sizeable gift to a family member.

Finally, consider the relational consequences of your gifts. What will the impact be on the person and their family? While it’s certainly okay to give different amounts or types of gifts depending on the needs of each family member, you may want to consider any tension that might arise before giving substantially more to one person than another. 

Giving gifts during the holidays can be a wonderful way to show your appreciation and love for your family members. However, you may need to consider the gift tax limit for 2022, as well as your state’s laws, so that you can make sure your gifts are properly accounted for.

How to Give Assets to Family

Giving assets to family members can be a way to help them financially.

When gifting assets to family, it can be important to consider your goal and how the asset will be used. Doing so can help you consider if the particular asset being given will help accomplish that goal and that the recipient is aware of any terms or conditions attached to it. 

Additionally, you likely want to ensure that the asset is transferred in a way that won’t have negative tax implications for the recipient or yourself. It is also important to note that if the gift is given to someone who is under the age of 18, additional legal considerations may be involved.

It can be helpful to talk to a tax or financial advisor about the best way to give assets to family members. They may be able to advise on the different tax implications or other legal issues that may be involved with the transfer.

Giving to Charity

December giving can account for roughly a fifth of annual nonprofit revenue. In other words, lots of people are writing big checks to charity at Christmas. Is this a wise way to give? Let's take a look…

Why do People Give to Charity at the End of the Year?

Many charities focus their fundraising efforts on end-of-year giving campaigns. They may host events, throw Christmas parties, or hold auctions to collect gifts in kind during the fourth quarter of the year. 

The holiday season often brings an extra sense of joy, making it easier for individuals to feel free to give generously. No matter the reason, giving during the holiday season is an excellent way to express gratitude and support those in need. 

But maybe, there's a better way. After all, most charities don't just operate at Christmas. They're doing good all year long.

What is Recurring Giving?

Recurring giving or tithing to your church can ensure that you are contributing to meaningful causes throughout the year. This type of giving not only helps those who are in need or a cause you believe in, but also gives you an opportunity to play a larger role and get more deeply involved.

Another benefit of recurring giving is that it allows you to plan ahead and budget for your donations each month or year. This helps to ensure that you are giving regularly and that you can be consistent with your donations. If you choose to make a one-time donation and have yet to plan accordingly, you might find the amount to be too large or something that suddenly causes a financial strain. But if you're budgeting annually or monthly, including your giving allows you to decide on how much you want to give in advance. It may make it easier to plan for and help keep your donations in line with your overall goals and income.

As Christians, we are called to give regularly and proportionally to income. In 1 Corinthians 16:2, the Apostle Paul writes “On the first day of every week, each one of you should set aside a sum of money in keeping with your income, saving it up, so that when I come no collections will have to be made.” Paul is instructing the church in Corinth to regularly set aside funds on the first day of the week to provide for the poor. 

Finally, recurring giving allows you to support your favorite organizations and causes on an ongoing basis, which can be better for their budgets, too.

What are the Benefits of Monthly Giving?

Giving regularly throughout the year can be beneficial in several ways. One of which is making it easier to manage; giving on a monthly basis can make that even easier. For example, you might find spreading out the cost of giving from month to month more palatable or easier to hold yourself accountable to. You may even find that you are able to make a larger donation that year than you had initially thought. 

Monthly giving can also help support charities throughout the year, as they do not have to rely on receiving one large donation from you during the holiday season. 

Coping With Gift Taxes

When it comes to giving during the holidays, it can be important to consider tax implications. You need to report gifts made to a single individual (not a charity) if they were above $16,000 to the IRS -  though you are unlikely to owe taxes on them. (Gifts to a spouse are not subject to the gift tax limit.)

Charitable donations are eligible for tax deductions if they meet certain criteria. Be sure to consult a financial advisor or tax advisor when considering any large gifts to charities of your choice.

Are there any particular tax implications or benefits specific to giving during the holiday season?

Donors sometimes give year-end gifts in order to claim one more donation on their income taxes before the year is out. Often it's done in coordination with end-of-year tax planning. While that's a fair and legal approach to tax savings, there are no specific benefits to giving during the holidays as opposed to giving at any other time of the year.

The holidays are a great time to give, but remember that giving is something that’s important year-round. If you would like to talk with a wealth management professional about your philanthropic goals and overall financial health, call Cooke Wealth Management. We'd love to talk with you.