New! Fundraise with Daffy Campaigns 🚀

How can charitable tax deductions benefit the donor?

Stock

Charitable tax deductions can offer significant benefits to the donor. One of the most generous income tax deduction strategies, charitable deductions allow you to deduct up to 30-60% of your Adjusted Gross Income (AGI) through charitable donations. This can lead to substantial tax savings, especially if you choose to donate appreciated assets like stocks, ETFs, and cryptocurrencies instead of cash. Donating appreciated assets allows you to avoid paying capital gains taxes on the asset, and you can immediately deduct the full fair-market value of the asset on your federal income tax returns for that year. This is a win-win situation for both you and the charity, as the organization receiving the asset doesn't have to pay taxes on liquidating the asset, ensuring the full amount goes to the cause you care about. However, most non-profits lack the capability to receive donations in the form of stocks, ETFs, index funds, and cryptocurrencies. This is where donor-advised funds (DAFs) like Daffy come in. Daffy is a great option for a DAF, allowing you to donate a substantial portion of your income and receive significant tax benefits. For the 2023 tax year, you can deduct up to 60% of your AGI through charitable deductions. You can also donate more than just cash, including property and appreciated assets, which can help you avoid capital gains tax and still receive a tax deduction for the full value of the asset. Daffy also makes it easy to bunch your charitable donations, a tax strategy that involves grouping several years’ worth of donations into one year to exceed the standard deduction threshold. You can contribute two or more years’ worth of donations into your Daffy account during one tax year and immediately receive the tax deduction for that amount. With Daffy, you can distribute funds to the charities of your choice whenever you're inspired to give, allowing you to space out your contributions over a two-year period, for instance, then go back to taking the standard deduction in the other years. Daffy also encourages year-long financial planning for charitable giving, helping you be more intentional with your giving and meet both your charitable giving goals and your tax strategy. By signing up for Daffy, you can easily donate stock or crypto, keep your tax receipts organized in one place, and plan all of your charitable donations. In conclusion, charitable tax deductions can offer significant benefits to the donor, and Daffy is a great option for a DAF that can help you maximize these benefits.

Please note that the information contained on this page is for educational purposes only and should not be considered tax advice. Any calculations are intended to be illustrative and do not reflect all of the potential complexities of individual tax returns. To assess your specific tax situation, please consult with a tax professional.

Get your Daffy account
Simplify your giving with Daffy, the Donor-Advised Fund for You™. Easily donate to almost every US public charity, track tax-deductible contributions, and access donation receipts all in one place.
Try Daffy for free
Daffy waives all membership fees for members with less than $100 in their fund, so get started today for free!

Don’t forget to download the app

Scan the QR code to get the iPhone app

Download on the App Store.
QR code to download the app from the App Store.

Sources