Gifts of Cash
With a gift of cash, a donor can make a simple gift and qualify for an income tax charitable deduction. There’s a reason cash gifts are so popular! Consider the following:
- The gift (cash, check, or credit card) will make an immediate impact on our important work.
- The full amount of the gift is tax deductible if the donor itemizes—the actual tax savings depends on the amount of the gift and the donor’s marginal income tax bracket.
- While the donor cannot deduct more than 60% of their adjusted gross income (AGI) in the year of the gift, they can carry over any excess deduction for up to five years.
- Because so many donors make cash gifts every year, the combined impact is an extremely significant and vital part of our ongoing work.
Will your client itemize their taxes this year?
Because the 2017 Tax Cuts and Jobs Act raised the standard deduction amount for individual taxpayers, many people now take the standard deduction instead of itemizing. However, if your client wants the tax advantage associated with charitable gifts of cash, they’ll need to itemize.
You may want to suggest that your client consider “bunching” their donations. Essentially, this means making two or more years’ worth of charitable gifts in one year to make itemizing worthwhile. You can help your clients determine if this is a good approach for them.
Evaluate the fit.
A cash gift is a good option for donors who:
- Received extra cash this year (say, from a bonus, inheritance, winnings, etc.)
- Want to secure a current charitable income tax deduction
- Want to make an easy gift than can be repeated year after year
Alert clients that while a cash gift makes the same impact on our work as other types of gifts, it may not be best for them to make a cash gift simply out of habit. Other gifts can provide them with various types of tax and planning benefits that are worth exploring from time to time.
See how it works.
Jonah receives a modest inheritance from a relative. Since he has already decided to make a gift to us this year in almost exactly that amount, it is very simple to make an online donation of that inheritance money. The UMass Dartmouth Advancement Team sends Jonah the proper acknowledgment of his gift, and he uses that to secure an income tax deduction when he itemizes.
Consider the timing.
Clients who want to qualify for a charitable deduction this year can make a donation at any time up to December 31. Mailed checks must be postmarked by December 31 (keep in mind that some post offices are closed on Saturdays and Sundays).
The UMass Dartmouth Advancement Team can help.
Reach out to us with any questions on charitable gift planning.