holiday piggy bank.jpgIdeally you’ve either budgeted and have a holiday savings account stocked with enough cash to get you through your gift giving, or spread your shopping out over the year so you have a closet full of gifts ready for wrapping. You haven’t? Well, don’t fret. For those of us who like to consider ourselves budget minded but generous gift givers, it’s time to resort to creativity.

Budgeting

The November issue of Real Simple magazine contains a helpful Holiday Savings Guide. I appreciated a suggestion by Ben Hecht of TheBeeHive.org. “Make a list of your gift recipients, then group them into tiers. Tier one can be your members of your family, tier two those who get a smaller gift, and tier three those who don’t have to get a gift.” He continues, “Set dollar limits for each level based on what you can afford (say, $20 for tier two), and tally them for your budget total. This is a simple way to spread your budget over a group of people.

Homemade Gifts

Sure you can order custom monogrammed items from high-end websites, but homemade and handmade tough can truly express your thoughtfulness this year. Try custom clothing, or cloth napkins & placemats. Or design sets of sheets and pillowcases with custom messages. Think of all of the items that can be created with iron-ons. You can find easy to use sheets at your favorite office supply store. Use your inkjet printer and computer or scanner to create personalized designs. Remember to create a mirror image of the design before you print so that your image transfers properly.

Edible Gifts

With a short grocery list and a little time you can make gifts of food. Consider creating edible delights for your friends and neighbors. (It is always a treat when I don’t have to cook.) Prepare items that have a long shelf life or can be frozen. Here are some “Freezer Pleasers” from CookingLight.com.

Try healthy and nutritious recipes. Again, some of us can easily put on extra pounds during the last few months of the year. Healthy and fun recipes can be great guilt-free gifts. Epicurious.com has an exquisite selection of easy to replicate recipes.

Charitable Contributions

If you are planning on making charitable contributions this holiday season remember these tax tips.

  • You cannot deduct contributions made to specific individuals, political organizations and candidates. Nor can you deduct the value of your time or services and the cost of raffles, bingo or other games of chance.
  • To be deductible, contributions must be made to qualified organizations.
  • Only contributions actually made during the tax year are deductible.
  • If your contributions entitle you to merchandise, goods or services, including admission to a charity ball, banquet, theatrical performance or sporting event, you can deduct only the amount that exceeds the fair market value of the benefit received.
  • Donations of stock or other property are usually valued at the fair market value of the property.
  • Special rules apply to donation of vehicles.
  • For a charitable contribution of $250 or more, you can claim a deduction only if you obtain a written acknowledgment from the qualified organization.
  • If you claim a deduction on your return of more than $500 for all contributed property, you must attach IRS Form 8283, Noncash Charitable Contributions, to your return.
  • Taxpayers donating an item or a group of similar items valued at more than $5,000 must also complete Section B of Form 8283, which requires an appraisal by a qualified appraiser.

For more information refer to IRS Publication 526.

Business Gifts

According to the IRS business gifts are deductible. In general, you can not deduct more than $25 for any business gifts you give directly or indirectly to any one person during your tax year. See Tax Topic 512, Publication 463, and Gifts for more information.

Additional Tips

To avoid last minute shopping, build up a “Gosh” drawer or box. Next time you see a cool gift on sale and you have a little extra in your budget, make the purchase. Put it in your “Gosh” drawer or box. Next time you find yourself saying, “Oh gosh, I forgot to pick up a housewarming gift for the neighbors party” you’ll have a solution on hand. It works great for unexpected guests and all types of occasions.

If you do hit the stores this holiday season do everything in your power to avoid using your credit cards…unless you are able to pay them in full, when the bill arrives! The average interest rate is 14.79% according to Bankrate.com. Extending your credit to give gifts can be extremely more expensive than paying cash!

Remember this holiday season doesn’t have to break your bank. With a little creativity and resourcefulness you can plan now, enjoy your holidays more, and save some money in the process.