Recent college graduates and young adults still in college may prefer cash as a Christmas gift.
Cash gifts are often written off as too impersonal, or, as in Ms. Starkey’s case, not festive enough. But as you’re scrambling to find the perfect something for a loved one, particularly the students and graduates who collectively hold about $1.2 trillion in student debt, a little financial wiggle room might be exactly what they want and need.
A New York Times article offers specific ways to make the gift of money personal to a recipient’s needs. Some ideas are to make a loan payment, pay tuition, or contribute to a 529 plan.
A gift of appreciated stock to someone in a lower tax bracket may benefit both parties.
APPRECIATED STOCK Given the stock market’s ascent over the last few years, you may be sitting on stock that has also risen appreciably. If you give those shares to a relative or friend in a lower tax bracket, he can sell them for cash and may pay far less in capital gains taxes than you would. The gift recipient could also use the proceeds to reinvest in broad-based index fund within that new Roth I.R.A. you helped set up.
But parents who give stock to younger children may not achieve the same sort of tax savings: The kiddie tax may apply if the child is under age 19, and in some cases up until age 24 if he is a full-time student and still receiving parental support. In that case, the child would still pay capital gains taxes at the parents’ rate, Mr. Luscombe explained.
Since I lack creative gift-giving ideas and because I believe cash is best, I usually go for the green in gifting to teens and young adults. This year I decided to present the cash in bright red envelopes, a Chinese tradition used for monetary gifts on New Year’s and other occasions. I think they will add a festive touch to the boring gift of cash.