The Gift of Cash
Nothing could be easier than making a gift of cash to Legal Services of North Florida. It is the most common gift and the one you probably think of first. All cash donations are deductible, if you itemize in the year of contribution, up to 50 percent of your adjusted gross income. Any excess deductions can be carried forward for the next five years.

If you itemize deductions on your tax returns, the first tangible benefit of making a gift of cash to Legal Services today is an income tax charitable deduction for the full value of the gift in most cases. The resulting reduction in income taxes payable lowers the net cost of the gift. If you are subject to state and/or local income taxes as well as federal, the combined marginal rate (after the federal deduction for those income taxes paid) should be taken into consideration in determining the gift's net cost.

If you don't usually itemize deductions, you may want to consider it for any tax year in which you make a sizable charitable donation. One technique used by people who have few itemized deductions is to alternate between years in which they take the standard deduction and make few charitable gifts, and the years in which they give double their desired annual philanthropic support and shift to itemizing.

If you predict that your estate will be subject to estate tax at your death, keep in mind that the value also is removed from your future estate. It completely eliminates the federal estate tax on that asset. This savings reduces the net cost of your charitable gifts.

Outright Gifts and Their Results

Cash gift. A cash gift by check is one of the most common methods for making an outright charitable contribution. For cash gifts of $250 and more, donors must have written confirmation from the charitable organization, as canceled checks are no longer sufficient proof of a deductible gift.

To illustrate the net cost of a $1,000 cash gift, assume the gift is made by a taxpayer with a federal marginal income tax rate of 36 percent. The amount of the tax bracket, multiplied by the amount of the gift, is subtracted from the gift to determine the net cost to the donor.

36% x $1,000 = $360
$1,000 - $360 = $640

Therefore, the net cost of the donor's gift is $640.
 

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The information on this site is not intended as legal, tax or investment advice. For such advice, please consult an attorney, tax professional or investment professional.

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