Filing status plays a significant role in determining the amount eligible for deduction. The standard deduction varies based on your filing status, and for the tax years 2022 and 2023, the amounts are as follows:
For single individuals, the standard deduction is $12,950 in 2022 and $13,850 in 2023. For married individuals filing separately, the amounts are the same. For married individuals filing jointly, the standard deduction is $25,900 in 2022 and $27,700 in 2023. For those filing as head of household, the standard deduction is $19,400 in 2022 and $20,800 in 2023.
However, if you're looking to maximize your tax deductions, especially for charitable contributions, you'll need to itemize your deductions. This is where Daffy, a donor-advised fund (DAF), comes in as a great option.
With Daffy, you can use a strategy called "bunching" to surpass the standard deduction limit and itemize your deductions. For example, if you're a single taxpayer who donates $7,000 to charity each year, your charitable contributions alone may not exceed the standard deduction threshold of $13,850. But by bunching two years' worth of contributions into a single tax year, you can double your charitable contributions to $14,000, thereby exceeding the threshold.
The beauty of Daffy is that it makes bunching easy. You can contribute the amount you wish to bunch to your Daffy fund and immediately receive a tax deduction for that amount. Then, distribute the funds to your chosen organizations whenever you're ready. This way, you can continue to donate $7,000 annually in both 2023 and 2024 using the funds you set aside in Daffy.
By maximizing your charitable tax deductions with Daffy, you can reduce your tax bill while supporting the causes you care about. So, start giving and saving more with Daffy today!
Please note: This information is for educational purposes only and should not be considered tax or investment advice. Consult with a tax and/or investment professional to assess your specific situation.
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.