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 your gift is tax deductible if you itemize—your actual tax savings depend on the amount of your gift, your marginal income tax bracket, and any applicable limitations on deductions.
- 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?
- No. If you choose to make use of today’s high standard deduction instead of itemizing, you are generally not allowed to take any income tax deductions. The one exception is for gifts of cash to a qualified charity (not including donor-advised funds)—you can deduct up to $1,000 ($2,000 for joint filers) without itemizing.
- Yes. You may want to consider “bunching” your donations—making two or more years’ worth of charitable gifts in one tax year. This can help you surpass the new 0.5%-of-AGI giving floor as well as the high standard deduction. Your advisors can help you determine if this is a good approach.
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 (subject to limitations).
Consider the timing.
If you want to qualify for a charitable deduction this year, you’re in luck—you can make a donation at any time up to December 31. Mailed checks must be postmarked by December 31—but the US Postal Service may not postmark your envelope on the day you drop it in the mail. To secure your deduction for this year, mail your check early or take it to the post office to request proof of timing (don’t forget 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.