Cash Gifting a Scam? – Part Two

While doing my research on cash gifting what I found was that both American and Canadians have the Constitutional Right to gift property, cash, along with other assets.  For the Americans we have the Preamble to the Constitution and the Bill of Rights to protect private citizen’s right to earn, pay taxes, and give away property and cash as long as it is performed in accordance to the laws and codes of this country.

If you wish to look for the gifting rules, they are found in the IRS Tax Code Title 26, Sections 2501-2504, 2511.  This is not a law, but it does tell us how much of the money, or value of the property we can freely give to one or several entities or individuals before incurring taxes on the value.  The maximum dollar amount for the year 2007 was  $12,000.  Any dollar amount gifted to an individual of more than $12,000 would require the receiver to pay a gift tax on the money.  Anything less than $12,000 the receiver does not have to pay taxes on because as the IRS said, the taxes have already been paid by the giver.

Even though the tax has been paid on the dollar amount received, it would be a good idea to retain all documentation regarding the gifting of the money.  You will need to be able to prove the money was a gift in the case of a tax audit.  If you wish to avoid a tax audit, then just claim the money and pay taxes on it.  This will prevent you from being red flagged for an audit by the IRS.

It has been said that cash gifting programs account for about 60% of all the money generated in the home-business industry.  I cannot be 100% sure about that fact, but I do know that cash gifting has recently become a popular activity.

Many people mistakenly take the IRS Tax Code as a law, which it is not.  However, it does cover the rules and guidelines taxpayers should use when gifting or receiving a gift of cash from someone, whether it be family, friend, or stranger.  On the other hand there is not law stating that the gifting of money to strangers is illegal.  For the record this is not my opinion, it is a fact.

It is however my opinion that most cash gifting programs operates in and above the laws of the United States.  If you are looking into a cash gifting program to join, you will want to make sure the program you choose is operating within the confines of the law.

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