This year, the IRS is willing to let you write off all your adjusted gross income if you give it to charity in the form of cash.

But just because you’re allowed to do it doesn’t mean it’s a good call.

When the CARES Act went into effect this spring, lawmakers folded in two tax incentives to encourage people to open their purses to charity.

The first established an above-the-line deduction, allowing a write-off of up to $ 300 in cash donations to charity. Filers can claim it even if they take the 2020 standard deduction of $ 12,400 for singles or $ 24,800 for married couples.

The second applies to people who itemize deductions. Those filers can claim a larger write-off for charitable cash donations. For 2020, you can deduct up to 100% of your AGI on cash donations to qualifying charities.

Private foundations and donor advised funds are excluded.

Normally, you can claim a write off up to 60% of your AGI for cash donations.

Generous write-off aside — even for 2020 – cash is probably the least tax-efficient way to donate to charity.

“For significant contributions, giving cash is the worst way to do it,” said Jeffrey Levine, CPA and director of advanced planning at Buckingham Wealth Partners in Long Island, New York.

“If you’re just doing it to be altruistic, don’t worry about taxes,” he said. “But for sound tax planning, it’s probably a poor way to go.”

Here’s how to step up your tax efficiency while doing good for others.

Cash donations are simple and straightforward. You cut a check to the charity, and you’re set.

However, from a tax-planning point of view, it can be a costly way to give.

For instance, if you decide to liquidate a few of your highly appreciated stocks to drum up the cash, you’re incurring capital gains taxes.

Instead, it makes better planning sense to transfer those assets directly to charity. This way, you avoid the tax hit and you claim a write-off for the fair market value of the investment.

“As we come to the final month of the year, most diversified portfolios are in positive territory,” said Megan Gorman, founding partner of Chequers Financial Management in San Francisco.

“One thing people need to think about is, ‘How can I donate to the charity of my choice and get the maximum tax benefit?'” she said.

Put another way, you’re also giving more to worthy causes by opting to donate the stocks instead of liquidating the holdings.

That’s because money you would have otherwise paid on long-term capital gains taxes — which range from 0%, 15% or 20%, depending on your income — will now go to the charity.

“Essentially, you’re giving up to 20% more by avoiding capital gains taxes,” said Nicole Davis, CPA and founder of Butler-Davis Tax & Accounting in Conyers, Georgia.

Another side benefit from giving away stocks or mutual funds that you would have otherwise liquidated: You’re diluting your portfolio’s concentration in equities without incurring taxes.

“You’re getting a second benefit by getting the gain out of the portfolio,” said Tim Steffen, CPA and advisor education senior consultant at Pimco.

This might make the best sense for assets you aren’t planning on passing to an heir at death. Heirs currently benefit from a provision in the tax code known as the step-up in basis.

That means when you die, your heir gets the asset valued as of the date of death. If your beneficiary sells the asset right away, he or she won’t pay any capital gains taxes.

“If you were going to hold this until death, maybe avoiding the gain is less of a deal for you,” said Steffen.

“But if you’re younger and you aren’t planning on holding the asset until death for the step up, giving appreciated property to charity might be a win,” he said.

Here’s one more reason to donate appreciated investments. Certain mutual funds distribute capital gains that can result in taxes to shareholders near the end of the year.

They might be a prime asset to give away if you act quickly.

“One way to mitigate your overall tax bill is to donate those mutual fund shares to charity before the distribution takes place,” said Gorman.

Philanthropy is a multi-year exercise in financial planning. There’s more to it than taking advantage of a one-time incentive in the tax code.

For instance, “bunching” your charitable giving — where you make at least two years’ worth of donations in one — may allow you to itemize this year and take the standard deduction in 2021.

In that case, using a donor advised fund — a tax-advantaged fund for charitable donations — might be a wise choice. You make a hefty contribution to the fund in one year and then make grants annually to charity to “smooth” your giving over time.

Since effective tax planning isn’t limited to one year, work with your financial advisor or tax professional to hash out a strategy.

“Anyone with substantial income should contact their tax professional and get an understanding of their income for 2020 versus 2021,” said Gorman. “Figure out where you can get the biggest bang for your buck.”