Picture this. You get up one fine morning. You almost mechanically spring into action and start the daily chores. Then the bell rings. You get an envelope stashed with cash. Wow! You keep it safe. The other day the same thing happens. You wonder what is the deal. Let me tell you that cash flow could just be the result of an innocent cash gifting program.
But no, don’t be so happy about the stashed envelope guys, as you are not going to get it everyday even if you are into a cash gifting program! On a serious note, though, those who are not aware of what exactly are cash gifting programs, this article could turn out to be interesting. Care for a look?
What is a Cash Gifting Program?
Approved by the IRS, cash gifting, to begin with is put to use as a legal and legitimate method of decreasing the tax burden. Individuals can be gifted up to $12,000 in a calendar which will reduce the tax burden for that year for the person who is being gifted.
An estate, estate director or an attorney can do that. Those who get the money as a gift just have to declare that he or she did not give anything back as a compensation for the gift. This is because the person who gets the gift does not have to declare or is not taxed on the money. Basically, it is great for, let us say, parents who wish to transfer their property or estate in the name of their children. If they do it this way, they will not be taxed on it.
This is the primary explanation of a cash gifting and cash gifting programs. The Internal Revenue Service (IRS) fundamentally sets a limit to how much someone can gift in monetary terms. It is typically a scheme which is arranged like a pyramid. Early members try and get money from the new ones joining the program. The new members try and hunt people to gift them money and the chain goes on. There are 2 variations in this program.
- One up Programs – It is not a simple pyramid scheme, but it is complex. Eventually, everyone becomes member number 1. The design is in such a way that single member is paid by only single other member.
- Multi level – This is based on a classic pyramid scheme, where a person invites friends and acquaintances into cash gifting programs. They in turn ask people they know to join.
The catch is that those who find people to join the program get money from them and they do not have to give anything in return. Yes, talk of creative ways to give money as gift and cash gifting programs sure top the charts!
Are Cash Gifting Programs Legal
Ah, now with this debate about cash gifting programs, we are treading on murky waters. Yes, the legal status of these programs has come under a lot of flak. There is a strong support to the fact that it is completely legal. It is all thanks to the fact that this system is mentioned under IRS Tax Code Title 26, Sections 2501-2504 and 2511. This legally seems to permit a person to give up to $12,000 a year to as many people as he or she desires.
It is not legally though, named as a Ponzi scheme and many a times connoisseurs of cash gifting programs prefer not to call it a Ponzi scheme, as these schemes involve investment of some kind. So technically and legally, these are not termed as Ponzi schemes. However, all said and done, some of the opinions go against the legality of these programs.
That is, if at all things go to the court, people involved in such a program are most likely going to be at a loss to put across their case. They might be slapped charges of evading income tax payments.
Eventually, whether a cash gifting programs are scams or real can be gauged only with the help of cash gifting programs reviews. There are some criteria which will tell you whether such a program is credible or not. For instance, a real programs will direct you to a mentor having a successful and functional cash gifting enterprise. Furthermore, beware of free cash gifting programs as well! This is where I stop pouring in my currency of words about cash gifting programs and leave you to decide whether to go for it or not!