Do You Pay Tithing on Gift Money?

Religious giving, commonly known as tithing, is a practice observed across various faiths worldwide, typically involving the contribution of a portion of one’s financial gains to a religious institution. A frequent question is whether gift money, an unearned financial transfer, falls within the scope of what is considered tithable. This article explores interpretations of income and increase, along with the nature of gifts, to discuss perspectives surrounding tithing on gift money.

Core Principles of Tithing

Tithing is a religious practice rooted in ancient traditions, often involving the dedication of a percentage, commonly ten percent, of one’s income or “increase” to a religious organization. This practice stems from motivations such as gratitude, faith, and supporting the operational and charitable needs of religious institutions. Individuals aim to acknowledge a higher power as the source of their prosperity and demonstrate responsible stewardship.

The concept of “increase” or “income” typically refers to any financial gain or material blessing received. This includes wages, business profits, dividends, and other financial inflows that augment wealth. Tithing calculations vary, with some traditions using “gross” income (before deductions) and others “net” income (after expenses or taxes). Some advocate for tithing on the full amount received, while others consider “increase” as profit after necessary expenses.

Nature of Gift Money

Gift money represents an unearned transfer of funds or assets from one party to another, made without expectation of repayment or exchange of goods or services. This characteristic distinctly separates gift money from earned income, such as salaries, wages, or business profits, which are compensation for labor. It also differs from investment income, like dividends or interest, which are returns generated from capital.

For recipients in the United States, gift money is not considered taxable income by the Internal Revenue Service (IRS). Any potential gift tax falls upon the giver, though most gifts do not incur a gift tax due to annual and lifetime exclusions. The defining feature of a gift is its voluntary nature and the absence of any obligation for the recipient to provide something of equivalent value in return.

Tithing on Different Types of Gifts

Applying tithing principles to gift money involves considering various forms of these unearned transfers. For direct cash gifts, such as birthday money or holiday gifts, some religious perspectives consider these personal income or blessings subject to tithing. Others argue that since gifts are not earned through labor, they do not constitute the “increase” intended for tithing.

Inheritance is an unearned transfer, and its tithability is often discussed. Some consider inheritance a substantial financial increase, subject to tithing. Other interpretations suggest inheritance, as a transfer of existing wealth rather than newly generated income, may not require tithing, especially if assets are not immediately converted to cash. If inherited non-cash assets, like property, are sold, the cash proceeds, especially any realized gain, are often viewed as tithable.

The size of a gift can influence tithing decisions, though the underlying principle often remains the same. The core consideration for many is whether any financial gain, regardless of its source, represents a blessing or increase. Some traditions may not strictly require tithing on gifts but encourage a “thank offering” for substantial, unexpected financial blessings. When non-cash gifts, such as a vehicle or real estate, are received and later converted into cash, the proceeds from the sale, particularly any profit derived, are often considered tithable. This is because the financial gain from liquidating an asset, even if initially gifted, constitutes an increase.

Personal Discernment and Decision

The decision of whether and how to tithe on gift money is a matter of personal faith, individual interpretation, and conscience. Religious texts and traditions provide foundational principles, but their application to modern financial scenarios can lead to diverse conclusions. There is not always a single, universally agreed-upon answer across all faiths or even within specific denominations.

Individuals are encouraged to consult their religious leaders, review scriptural guidance, and engage in personal spiritual reflection. This process involves aligning the tithing decision with one’s understanding of religious obligations and personal financial situation. The responsibility for determining what constitutes tithable income, especially concerning unearned gifts, rests with the individual believer.