When you have Southwest Rapid Rewards, those points don’t just come from flying. You can also earn points by signing up for the Rapid Rewards® Credit Card and using it to make everyday purchases like gas or groceries. You also earn points when friends sign up using your referral code. The more you fly and refer others, the more perks you unlock as a member of Rapid Rewards. But what if you want to use your points for someone else? Can you use your Southwest travel funds for someone else? Let’s take a look at when and how this could be appropriate and why not always…
Can I Use Southwest Travel Funds For Someone Else?
No. Travel funds are not transferable to another person, as they’re completely virtual and loaded onto a unique, 16-digit code called a TravelCard number. If you’d like to book travel for another person, you’ll need to transfer the funds onto their Southwest boarding pass before booking. You can do this by adding them as additional travelers to your reservation.
When Is It Appropriate To Use Your Travel Funds For Someone Else?
- When you’re traveling with a spouse or partner, you can both share the travel funds. If you’re traveling with kids, for example, you could use your points to pay for one parent and the other parent could pay for the children’s tickets.
- You can also use your travel funds to pay for a friend or family member on an award ticket. This is known as a “buddy pass,” and it works just like it sounds: You buy an award ticket for someone else who pays you back later.
- If someone else is paying for your trip but isn’t traveling with you, travel funds are a good way to reimburse them without having to deal with cash or credit card transactions on vacation.
- Sometimes Southwest will allow you to transfer points from one person’s account to another’s account if they’re logged into their account but not logged into yours (this is known as “check out” in the Southwest system). I’ve used this trick successfully in the past when I wanted to transfer my points from my wife’s account over to mine so that I could book something (she doesn’t like redeeming points, so it’s much easier to just transfer them over to me). Just make sure you don’t have any other pending redemptions before you do this, as the points will be transferred to your account instantly.
- If you are using Southwest points for a friend or family member who isn’t traveling with you, make sure that they are logged into their account and that you are logged into yours. Then, in the “transfer points” field enter their email address (make sure Southwest is sending them emails) and then the number of points you want to transfer over to their account.
- You can also use Southwest travel funds to pay for someone else’s taxes and fees on an award ticket if they’re not traveling with you. You can even use your travel funds to pay for another passenger’s award flight entirely!
- If someone else is paying for your trip but is not flying with you, it’s possible that Southwest will allow them to book a flight on your behalf (this is known as “check out” in the Southwest system). However, this doesn’t always work and I would recommend calling customer service first just in case there’s some sort of glitch.
- If you want to use Southwest travel funds for a trip that someone else is paying for but isn’t traveling with you, make sure that the other person is logged into their account and that you are logged into yours. Then, in the “transfer points” field enter their email address (make sure Southwest is sending them emails) and then the number of points you want to transfer over to their account.
- When using Southwest travel funds to pay taxes and fees on an award flight, it’s always best to transfer points directly over from your account instead of using cash. This way, if there’s any sort of problem with the transaction, you can easily get your money back by calling customer service instead of having to wait for a credit card chargeback.
- When flying an award flight paid for by someone else, you can’t change the name on your reservation. However, you can call customer service and explain the situation and they might be able to make a special exception for you.
Why You Shouldn’t Always Use Your Travel Funds For Someone Else
- You have to pay taxes on the money you give away.
- If you need it, you may not be able to get it back from the person or institution that got it from you.
- You could end up with a tax liability for giving away money without expecting to get anything in return, particularly if your gift exceeds the annual gift tax exclusion amount ($15,000 per person per year). The gift tax is equal to 40% of the number of taxable gifts over $15,000 per person per calendar year. This means that if your total gifts exceed $75,000 ($100,000 for married couples filing jointly) in a calendar year, you will owe gift taxes on the excess amount (i.e., $60,000 x 40%). There is no limit on how much you can give away during your lifetime; however, there are restrictions on how much you can give out at one time. For example: If Bob gave his nephew $50,000 cash and then two weeks later he gave him another $10,000 cash (for a total of $60,000), Bob would have made two taxable gifts totaling $60K in that calendar year – which would be subject to the gift tax.
- You may not want to give someone more than $15,000 because of the impact on your estate planning. If you give away more than $15,000 in a calendar year, you will be taxed on the excess amount and may lose valuable estate tax benefits. For example: If Bob gives his nephew $50,000 cash (for a total of $60,000), he will have made two taxable gifts totaling $60K in that calendar year – which would be subject to the gift tax and could negatively impact his estate planning.
- You should not give money away just because someone asks for it or because they tell you they will use it for something that is important to you like your education or medical bills. This is particularly important if you are considering giving money to someone who is not a relative or family member because they may use the money for something that doesn’t benefit you at all or even worse – something that actually hurts you in some way (e.g., drug addiction).
- You don’t want to give away large sums of money without some type of written agreement spelling out what happens if your relative or family member does not use the money as you intended. For example: If Bob gives his nephew $50,000 cash and doesn’t secure a written agreement specifying that his nephew will use the money to pay off his mortgage, Bob could lose the home and any equity he has in it if his nephew chooses not to use the money as he had planned.
- You should never give away large sums of cash without first consulting with your attorney and financial advisor because there are many different ways you can give away or gift money that can minimize taxes and protect your assets from creditors (e.g., irrevocable trusts, qualified tuition programs, life insurance policies). For example: If Bob gives his nephew $50,000 cash and then has it deposited into 529 college savings account in his name (which would shield him from gift tax), he would have made two taxable gifts totaling $60K in that calendar year – which would be subject to the gift tax.
- You may want to consider giving away appreciated stocks or other investments instead of cash when making gifts because doing so will help lower your overall tax liability. As long as you have held these investments for more than one year before giving them away (known as a “long-term” capital gain), you will only be taxed on a 15% capital gains rate instead of the 28% income tax rate (which is subject to change in the future). For example: If Bob gives his nephew $50,000 worth of Apple stock that he bought for $10,000 five years ago and has now increased in value to $75,000, he would only have to pay long-term capital gains taxes on the $55K difference between $10K and $75K – which would equate to a 15% long-term capital gains tax.
- You may want to consider giving away non-cash gifts (e.g., real estate, stocks, business interests, life insurance policies) in order to minimize your overall tax liability because you can give away up to $5M worth of assets each year without incurring a gift tax as long as you make the gifts to your spouse and/or qualified charities. For example: If Bob gives his nephew $50,000 worth of Apple stock that he bought for $10K five years ago and has now increased in value to $75K – but only wants to give away $25K per year (to his nephew and three charities), he could just give away one-quarter of the stock ($12.5K) each year instead of giving his nephew the whole thing at once.
- You should never make a gift that would cause you or your spouse’s assets to fall below any minimum required distributions (MRDs) from retirement accounts that are required by law before age 70 1/2 because doing so will result in penalties for failing to take MRD’s on time and could also potentially result in a penalty for taking an early withdrawal from those accounts (if applicable).
Using Southwest travel funds for someone else is a nice gesture. It is appropriate to use travel funds for a child or someone who is less fortunate than you. It isn’t always appropriate to use travel funds for someone else, however. This is especially true if you’re booking a trip for a child and you aren’t paying for their ticket. You also want to make sure you have enough points in your account to pay for your own flights.