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Money Management (12/09/2007)
When buying presents at this time of year, people often spend a lot of money without being sure that theyíve really found the right gift. While it is surely the thought that counts, itís also great to be able to give a present thatís truly appreciated by the recipient.

According to the Minnesota Society of CPAs (MNCPA), there are many financially savvy ways to indulge or honor a loved one. If youíre tired of buying the same old ties or scarves, hereís a look at some sensibleó-and satisfying-óways to get the most for your holiday gift dollars.

Saving for tomorrow

An investment in the future is often the most thoughtful present. A U.S. savings bond is a popular gift solution for a young child or student. In addition to being a safe investment, a U.S. savings bond can also introduce youngsters to the value of saving, and they offer federal and state income tax benefits. Some of these bonds, which are issued by the U.S. government, can be purchased for as little as $25. They earn interest or increase in value while they are held, depending on the type of bond chosen. The federal government offers more information about savings bonds at www.savingsbonds.gov.

One size fits all

If youíre not sure about the best present for one person on your list, a gift card or gift certificate allows the recipient to buy just what he or she wants. CPAs do offer some advice on using them, based on alerts from the Federal Trade Commission and other watchdog groups. First, when buying a gift card, ask what fees are involved. Gift card issuers may collect a fee for purchasing the card, may deduct monthly fees until the card is used and may charge the recipient for using it. Ask, too, if the recipient can get a replacement if the card or certificate is lost or stolen, and if the card will expire after a certain period.

Contribute toward college

529 plans are savings vehicles that families can use to put away money for college without paying federal tax on their distributions (there may be state tax advantages too, depending on the state and the plan). Taxes on earnings within the plan are deferred and when money is withdrawn for qualified educational expenses, the distributions are tax free. Anyoneó-a grandparent, aunt or uncle or even a family friendó-can contribute to a 529 plan. If youíre looking for a great way to finance a loved oneís education, consider starting or adding to a 529 plan at the holidays.

Donate to a good cause

Wondering what to get for the person who has everything? The best choice may be to make a donation in their name to a worthy cause thatís important to them. Youíll be showing you care about their interests and making the world a better place at the same time. There are many causes to choose fromórescue services, environmental groups, animal welfare organizations, human rights groups. Some organizations make it possible to use your donation to pay toward something specific, such as saving an area of natural habitat or buying livestock for an impoverished village in the recipientís name. Investigate your options and find out the best way to give a gift that will make a difference.

Seek advice from a CPA

Itís possible to have fun with your holiday gift giving and still make prudent purchases. Your CPA can help. Ask him or her for more insights into any of the ideas in this article, or about other satisfying ways to make the most of your gift-giving budget.

Information and resources are available to the public on the MNCPA Web site (www.mncpa.org/information) including state and federal tax forms and information and financial planning information for individuals and small businesses. A free CPA referral service is also available on the Web site or by calling 800-331-4288. The MNCPA is part of the national 360 Degrees of Financial Literacy campaign to help Americansí improve financial literacy; information and resources are available at www.mncpa.org/360.



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