Get Some Peace of Mind About Tax Time this Holiday Season

Tax Time

Christmas as we know it was not celebrated until the age of the Industrial Revolution when retailers encouraged mass consumerism.  They needed to rid their stores and factories of the stockpiles of merchandise on hand to minimize the amount of taxes they would have to pay on their inventory.  In fact, the whole Black Friday Shoppingpaloza has its origins in being the first day retailers and small business owners showed a profit for the year, or went from red ink, which represents a deficit in accounting, to showing black ink, meaning a profit or the breakeven point on their balance sheet.  Even today, a quarter of all spending by families is timed to coincide with the Christmas shopping season.

By the 1930’s the jolly Santa Clause or St. Nick as he is also known, was the poster boy for all the gifting that was encouraged during the holiday season.  He is actually based on a Dutch saint who was famous for giving gifts.  So, once Madison Ave had their mascot, the crass commercialism became more fervent.  If you are concerned about owing taxes on the gifts you give or receive, first, look up the definition of gifts according to the IRS.  To them, a gift is the transfer of property, or the use of income from property – including money – without expecting something of at least equal value in return.

Are you right to be concerned about receiving gifts of cash?  Yes, but the person who bestowed the cash is the one who could be liable for paying taxes on it.  This doesn’t apply in every case, however.  A transfer of property between spouses will not result in a gift tax.  Which is even more reason to give your loved one some spending cash this holiday season to use on a nice vacation.

After all, when you travel, you’re contributing to the economy, so you can think of it as your patriotic duty to get a little cash crazy at Christmas time.  Especially when you can search Groupon and save on the items you use every day.  You can use the money saved to rent an extended stay suite on a Motel 6 property, and not have to put up with your in-laws snoring and bickering over who gets the last pork chop at the Christmas dinner table.

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