I’ve always found gift cards a bit odd. Don’t get me wrong, I like gifts and never turn them down. But it seems to me a gift card is the giver’s way of saying, “I wanted to give you a gift, but either don’t know what you want or am too lazy to go buy an actual gift.” Worse, there are amounts you may have a tough time spending in full, say $25 at Best Buy, where you’ll likely have to dip into your pocket to buy two CDs you may have found on sale elsewhere, or just bought the two good songs a la carte on iTunes. To make matters worse, the non-store specific cards carry an ‘activation fee’ that runs as high as $5.95, this for the honor or giving them your money.
Now, I run into an article on CNNMoney that confirms my other thoughts on this topic, 27 percent of recipients never use the card they got. Forget about the cards that have a monthly fee and eventual expiration, over 1/4 of the cards given get lost, forgotten, or just put aside as they are to a store that one doesn’t frequent. My 9 year old likes the gift card, it feels like a grown-up thing to use, like a credit card. But I can do without them altogether. You want to give me a gift but don’t know what to get me? Send a check to the New England Shelter For Homeless Vets in my honor. You’ll get a tax deduction and I’ll feel better knowing the money went to help those in need.
(1/2 update - There are Consumer Protection Laws which apply to gift cards and impact the fees charged as well as expiration times, these laws vary by state.)
JOE
I wrote recently about donating IRA money and received a couple questions. So a clarification and a thought. First, this only helps you if you were planning to donate money anyway, I am not promoting any particular charity, nor am I preaching that one should feel compelled to share. That’s certainly a personal decision. There is a financial benefit to you only if A) you were about to make a donation anyway, and B) you only take the standard deduction, so you are unable to take the donation as a charitable deduction, i.e. you have no schedule A.
That said, this great opportunity was only placed into the tax code for 2006 and 2007. You have 3 more months to benefit from this law. Here’s my thought; Both Schwab and Fidelity offer charitable gift funds, which allow you to make a gift to the fund now, and disburse it to the final charity of your choosing at a later date. If you are in a high tax bracket, say 33%, you may take advantage of the law before it goes away, making the donation now, and passing it along over the next two or more years. This suggestion is strictly about tax planning and finding the opportunities within the tax code. All comments are welcome.
JOE
