Tax Deduction Gift Exclusions

A present or a gift is simply an object given to a person without expecting anything in return or any compensation. However, an object is not always a gift; sometimes a gift is intended to be free, regardless of whether that gift is already possessed by the one to whom it’s given. If you are confused about what constitutes a gift and what doesn’t, we’ll be the first to tell you that a gift is almost always something (anything) that you don’t have to buy, and in most cases, it is very useful and enjoyable. Here are some of our personal favorites as gifts:

Blogging. Most everyone has heard of blogging, and most people have some experience with it. What most people haven’t had much experience with, however, is the phenomenon of gift-giving through blogging. Social media has made givers and receivers of gifts able to communicate in such a way that often the exchange of gifts takes place online as well as offline. Many blogs, especially the ones related to travel, are essentially online diaries, which give a more intimate look at the giver’s world and what he or she hopes to accomplish for the recipient.

Digital wall art. Just as blogging makes it easy for a giver to communicate his or her appreciation of a gift by way of words, so does digital wall art. Often, the subject of the art is itself a gift, such as a coffee table photo of a destination spot showing pictures of famous landmarks, or a collage of photos taken from various sources around the globe that show the location and production of particular art styles. Gifts can also be staged as a collage of images and strategically placed within the artwork to convey a certain message about the giver.

Doing a Doake. In some cases, a drake is a literal translation of the phrase “I give.” In which case, the gift would be a mirror that reflects the donor’s image onto the gift recipient’s wall or another surface. Sometimes this is done with actual physical objects (for example, a wooden box with a photo inside), but more often it’s an idea that the giver wishes to convey indirectly.

Gift-giving across the tax bracket. Another growing trend is giving gifts at the appropriate tax bracket for the intended recipient. For instance, there are now officially designated categories of gifts, such as those which are considered a luxury, and those which are considered a necessity. There are also now separate categories for gifts that are considered to be for political campaign purposes and those which are given as a tax writeoff. Many retailers have developed websites that list all of the items that fall under each separate category, allowing shoppers to make an informed purchase that helps the donor achieve tax benefits and is compliant with the tax law.

Gifts that can’t be included in the annual gift tax exclusion to include real property, gifts to certain educational institutions, architectural creations, personal property, antique and periodical collectibles, art collections, personal use materials, and several other items that the Internal Revenue Service has determined are items of extraordinary interest or value. Again, this list is not inclusive and is constantly being updated. While many retailers and manufacturers have complied with the law by including these items in their sales, there are still those who won’t count them among their wares because they feel they cannot be categorized as a gift. As such, gifts that fall outside of the annual gift tax exclusion can be more difficult to purchase for many consumers, but the ultimate goal is to give something that will help the receiver enjoy a greater benefit from purchasing a product or service, and one that will be appreciated beyond the year in which the item was purchased.