Facts You Need to Know About Cash Gifting

Cash gifting is common in our everyday life and this article tells you all about it.

It is a normal phenomenon that one person gives free cash as a gift to another person, especially when life is really hard for the other. This is done without expecting any reward or incentive.

There are facts about cash gifting that we must be reminded of. This is important so that we can always do the right thing when we give or receive cash gifts.

That said, here are more facts you need to know about cash gifting.


What is Cash Gifting?

First off, it is important to define what cash gifting means. It is simply the presentation of cash as a gift to another individual or group of persons.

When cash gifting occurs, there is an expected reward from the recipient, and he or she does not have an obligation to repay the money because it was not a loan.

Cash gifting is a process with no strings attached. Also, neither goods nor services are provided in the process.

It is an absolute sacrifice of cash from a giver to a receiver.

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cash gifting


Who gives cash gifting?

Just about anyone can be involved with cash gifting.

A parent can give their kids free cash, Friends can give free cash to each other, an individual can give or donate free cash to charities, etc.

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Different ways to give cash other than physical cash

There are many ways to give others cash as gifts. These include:

  • Gift card – You can buy a gift card for someone you know so they can use it to shop for their favorite dress, shoe, meal, or item of value, etc., at their preferred stores or restaurants.
  • Savings account transfer or certificate of deposit – You can give cash to another person by giving them a certificate of deposit or a savings account.

You can open this account and transfer the ownership to another.

In most cases, this is done to teach others the importance of saving money.

Another benefit of this is that you are putting away money for the person for future use.

  • Shares of stock – Another way to give cash to others is by giving a recipient a piece of ownership of a company. This will make the recipient a shareholder of a company.

Besides, the value of investing is taught here.

  • 529 Plan Contribution – You can contribute to the future of a child by giving him or her cash in the form of the 529 Plan. This is a tax-advantaged savings plan designed to help pay for education.

It can be used to cover educational expenses from kindergarten through graduate school.

There are two basic types of 529 plans: savings plans and prepaid tuition plans.

529 plans are run by the states in the US, and their rules differ.

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When is cash gifting popular?

Cash gifting is popular during celebrations or when the recipient is in dire need of cash.

So, most people receive gifts during their birthdays, weddings, anniversaries, celebrations, medicals, charities, and other special events, etc.

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Receiving cash gifts

Just about anyone can receive free cash gifts. You can receive cash gifts from family members and friends. The cash you receive as a gift can be used for just about anything.

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Is Cash Gifting Taxable?

In the United States, a cash gift is tax-exempt if it is not more than $14,000. The giver is taxed while the recipient is not.

The tax is deducted like it is done with personal income.

However, if the cash gift is to a charity then a tax is not paid.

The IRS explains and helps you determine what makes a gift taxable.


Cash Gifting Programs

These are schemes which encourage individuals to give free cash with the hope of getting back their money with increased totals. The idea behind these programs, of course, is to make money.

Most cash gifting programs work in the following ways:

  • You get referred and sign up with the cash gifting program
  • You pay the person that referred you to the program a certain amount
  • You start promoting the program and referring others
  • You get paid by someone you have referred to.

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Cash gifting programs are risky ventures because they work like Pyramid Schemes that apply the steps below:

  • You get people to join a program.
  • You refer people that also pay you money.
  • Every person they refer pays them money.
  • A portion of the money goes to your higher-ups.
  • Long story short, the money flows up.

So, cash gifting and pyramid schemes are the same. They must be avoided because most are scams that eventually makes you lose money.


What is the difference between cash gifting and cash gifting programs or systems?

Cash gifting is not intended to bring any reward for the giver. The idea is to give free cash to other people or organizations.

Cash gifting in itself by its nature is giving and not receiving anything in return.

Cash gifting programs also allow the giving of free money but the participant of these programs do so to get paid. So, it is against the principle of free cash gifting.

Real cash givers do not expect to be paid!

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Is Cash Gifting Legal?

Cash gifting is legal. If you don’t pay the tax required for gifting a certain amount, then you may get into hot legal waters. In the United States, you are eligible to pay tax on cash gifts of more than $14,000.



Cash gifting is the free giving of cash. It is a personal thing and demands no rewards. It is different from a cash gifting program which is a scheme whereby the participants expect money in return.

Cash gifting programs are illegal and most often scams that eventually rips the participants of their hard-earned money.

So, if you are discussing cash gifting on its merit, then you must understand that there are no strings attached.

However, it is important to give cash legally. You should also pay the amount of tax associated with the free money you give to legalize your giving.

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