The Power of Giving: How Cash Gifts Can Make a Big Difference

My family has a tradition of giving a group “sibling gift” for milestone birthdays. Though we’ve come up with some great experiences, events and house-related ideas over the years, sometimes a gift card or cash is the best option. It goes with everything, and it always fits. As we move towards the last quarter of 2024, the efficiency and flexibility of cash gifts may also appeal to you as you contemplate year-end giving. Below are some thoughts on the current available options.

Annual Cash Gift Exclusion:  In 2024, individuals can give up to $18,000 per individual gift recipient without creating any gift tax liability. If you’re married, that means each spouse can give up to $18,000 per recipient. Consider gifting to an individual’s investment account. For a student, you can also make a one-time accelerated gift to a 529 plan for up to five years’ worth of this annual exclusion amount.

 Cash Gifts to Qualified Organizations: You can give outright gifts of cash to your favorite organization at year end – and they will love you for it! Outright cash gifts, especially unrestricted, provide quick support in the areas of greatest need. As an example, nonprofits such as food banks have partnerships with local businesses where they can purchase most-needed pantry items at significant discounts. In such cases, a cash donation goes further than a gift of assorted grocery items. For some organizations, their greatest time of need for the people they serve is during the fall and winter months. Giving during that holiday season can fill significant gaps in funding at a critical time – especially for smaller local organizations.

Cash gifts to a qualified organization don’t require an appraisal.  But a non-cash charitable gift valued over $5,000.00 requires a qualified appraisal. There are specific rules determining qualification of appraisers, and they must sign off on IRS Form 8283 along with the donor and the receiving entity. Consult with your tax specialist for this type of arrangement.

Wait…Is This Thing Qualified? Before making any charitable gifts of cash, it’s important to consult with your tax advisor each year to determine your charitable deduction limits based on your adjusted gross income. You may donate to perennial favorites, but if new organizations catch your eye, they can be verified first by visiting www.irs.gov/TEOS. You can learn more about them at www.charitynavigator.org as well. In our “Click Here to Donate” world, it never hurts to confirm.

Remember that financial decisions are not one size fits all. Before making charitable gifts, consult with your financial advisor and tax specialist. Our team of professionals are available to help you make the most of your year-end giving.

Kate McGinn, ATFA is a Trust and Charitable Services Officer. She received her Accredited Trust and Fiduciary Advisor (ATFA) certification from Campbell University. To speak with Kate McGinn, please contact our office at (503) 292-1041 or via email at info@allentrust.com.