How to Send Money as a Gift: Methods & Tax Rules

Gifting money is a common practice, whether for special occasions, financial support, or simply as a gesture of generosity. Navigating the various methods for sending funds, understanding potential tax implications, and ensuring the security of the transfer are all important considerations. This guide addresses how to choose appropriate transfer methods, clarifies tax responsibilities, and offers advice on safeguarding transactions.

Popular Methods for Gifting Money

Choosing a method for gifting money involves considering factors like speed, cost, and convenience. One of the simplest approaches is handing over physical cash, which offers immediate access to funds for the recipient. However, mailing cash is generally not recommended due to the significant risk of loss or theft, as it lacks traceability.

Traditional paper checks remain a widely used option for gifting money, providing a clear record of the transaction. Personal checks are convenient but can take several days to clear, while cashier’s checks or money orders, obtained from a bank or post office for a small fee, offer guaranteed funds and greater security.

Digital payment applications, such as Zelle, Venmo, PayPal, and Cash App, have become increasingly popular for person-to-person transfers. These apps allow for instant or near-instant transfers directly between bank accounts or app balances, often with no fees for standard transactions. However, daily or weekly transfer limits can apply, and once sent, transactions are typically irreversible, making it crucial to verify recipient details carefully.

Bank transfers, including Automated Clearing House (ACH) transfers and wire transfers, offer reliable ways to send money. ACH transfers are electronic payments that move funds directly from one bank account to another, usually taking one to three business days to process and often incurring low or no fees. Wire transfers, conversely, provide the fastest way to send funds, often completing within hours, but they typically involve higher fees ranging from $15 to $50 for domestic transfers.

Gift cards, available as physical cards or electronic e-gift cards, offer a versatile gifting solution, allowing recipients to purchase goods or services from specific retailers or general categories. While convenient, gift cards may come with activation fees, and their value is tied to the issuing merchant, limiting the recipient’s spending flexibility.

Understanding Gift Tax Rules

Understanding the rules surrounding gift taxes is an important aspect of gifting money, although most gifts do not result in tax liability. The Internal Revenue Service (IRS) provides an annual gift tax exclusion, which for 2025 is $19,000 per recipient.

Should a gift exceed the annual exclusion amount to a single individual within a calendar year, the giver is generally responsible for reporting the gift to the IRS. This reporting is done on IRS Form 709, the United States Gift and Generation-Skipping Transfer Tax Return. However, filing this form does not necessarily mean gift tax is owed; instead, the excess amount above the annual exclusion reduces the giver’s lifetime gift tax exemption.

The lifetime gift tax exemption is a much larger amount that individuals can give away during their lifetime or at death without incurring federal gift or estate taxes. For 2025, this exemption is $13.99 million per individual. Gifts exceeding the annual exclusion amount simply draw down this lifetime exemption, and actual gift tax is only paid if the total cumulative gifts over one’s lifetime surpass this substantial figure.

Certain types of gifts are entirely exempt from gift tax and do not count against the annual exclusion or lifetime exemption. Gifts to a U.S. citizen spouse are generally unlimited and tax-free. Additionally, payments made directly to an educational institution for tuition, or directly to a medical provider for medical expenses, are not considered taxable gifts.

Ensuring Secure Money Transfers

Ensuring the security of money transfers is important, regardless of the amount being gifted. A foundational step involves meticulously verifying the recipient’s information before initiating any transfer. Confirming the correct name, account number, email address, or phone number can prevent funds from being sent to the wrong individual or account, which can be difficult or impossible to reverse.

Utilizing trusted and reputable platforms or services is another layer of security in money transfers. Well-established financial institutions and recognized digital payment apps employ robust encryption and security protocols to protect transactions and personal data. Researching the security features and customer service reputation of any service before use can mitigate risks.

Remaining vigilant against common scams is also important for safeguarding gifted funds. Phishing attempts, where fraudsters impersonate legitimate entities to trick individuals into revealing sensitive information, and fake requests for money are prevalent. Always confirm the identity of the person requesting funds through an alternative, verified communication channel before sending any money.

Maintaining detailed records of all transactions provides an important safeguard. Keeping receipts, transaction identification numbers, and confirmation emails can be invaluable for tracking funds and resolving any discrepancies that may arise.

Gifting Money Across Borders

Gifting money across international borders introduces additional complexities beyond domestic transfers. Currency exchange rates are a primary consideration, as fluctuations can impact the actual value of the gift received by the recipient. It is advisable to monitor exchange rates and understand how the chosen transfer service applies them to ensure the intended amount arrives.

International transfer fees also tend to be higher than domestic fees and can vary significantly among different services. These fees might include a flat charge per transaction, a percentage of the transferred amount, or hidden costs embedded within unfavorable exchange rates. Comparing the total cost, including all fees and the effective exchange rate, across multiple providers is a prudent step.

Specialized international money transfer services, such as Wise (formerly TransferWise), Xoom, Western Union, and MoneyGram, are designed to facilitate cross-border transactions. These services typically offer competitive exchange rates and varying fee structures, providing efficient ways to send money to different countries. They often support various delivery methods, including direct bank deposits, cash pickups, or mobile wallet transfers, catering to diverse recipient needs.

Beyond fees and exchange rates, potential reporting requirements for international gifts can differ. While the giver generally does not face U.S. gift tax implications for gifts to non-U.S. persons, the recipient may have reporting obligations, particularly for large gifts received from foreign persons. For instance, U.S. citizens or residents receiving gifts exceeding a certain threshold from foreign persons may need to report them on IRS Form 3520.

Finally, considering the recipient’s ability to access the funds in their country is important. Factors such as the availability of banking infrastructure, common methods for receiving funds, and local regulations regarding cash withdrawals or foreign currency conversions can all influence the ease with which the gift is utilized. Confirming these details with the recipient beforehand can prevent unnecessary delays or complications.