You could give flowers. You could give candy. You could give jewelry, a watch or a gift certificate. They’re all fine Valentine’s Day presents, and your recipient would appreciate any of them. But this year, why not go beyond the usual gifts and give your valentine something that can sweeten the rest of the year — and beyond? Specifically, why not give a financial gift?
Of course, you can always write out a check, or stick some money in a card. But why not think "outside the box" a little bit?
Here are some possibilities to consider:
• Give stocks. You might want to give shares of stock in a company that makes products favored by your loved one. As an alternative to buying stocks, you could give some shares of your own. You’ll need to know what you originally paid for the stock (its tax basis), how long you’ve held it and its fair market value at the date of the gift. The recipient will need this information to determine gains or losses when he or she sells the stock. (You’ll also need to determine if you have to pay gift taxes. You can give up to $13,000 per year, free of gift taxes, to as many people as you want.)
• Give a savings bond. You might think that U.S. government savings bonds were a quaint relic of the past, but they’re still around. Your valentine might appreciate a low-risk, government-backed bond that pays a guaranteed rate of interest. Plus, you can buy a Series EE bond for as little as $50 or as much as $5,000 (the limit for a calendar year).
• Contribute to an IRA. The IRA contribution limit for 2009 is $5,000. Investors who are 50 or older can also make a "catch-up" contribution of an additional $1,000. So, if your valentine hasn’t fully funded his or her IRA for this year, you can help. While you can’t put money directly into someone else’s IRA, you can write a check for that purpose. Because of their tax advantages, IRAs are great retirement-savings vehicles, so they are well worth funding. (Traditional IRAs grow tax-deferred; Roth IRAs grow tax-free, provided the investor has had the account for at least five years and is 59-1/2 or older.)
• Make a charitable gift in your valentine’s name. Your loved one, like many people, probably supports a variety of social and charitable organizations. By making a donation to one of these groups in your valentine’s name, you can add a special meaning to this Valentine’s Day. At the same time, you’ll be giving yourself a little valentine, because you may be able to claim a tax deduction for your charitable gift. In fact, if you give an asset, such as a stock, which has appreciated in value, you’ll get an extra tax break because you won’t be responsible for capital gains when the charity eventually sells the stock.
By making any of these gifts, you’ll show your valentine that you truly care about the most important part of his or her life — the future.