As we navigate the 2023 tax season, it's crucial to understand the latest IRS updates and how they impact your tax strategy. One key component to consider is the standard tax deductions. For the 2023 tax year, the standard deductions have increased compared to 2022. For single filers and married individuals filing separately, the standard deduction is $13,850, up from $12,950 in 2022. For married individuals filing jointly, the standard deduction is $27,700, up from $25,900 in 2022. For those filing as head of household, the standard deduction is $20,800, up from $19,400 in 2022.
While these increased standard deductions mean lower taxable income for many taxpayers, it also means you must surpass a higher threshold to itemize your deductions. However, there is a tax strategy called “Bunching” that many people use to lower their tax bill with charitable deductions.
Charitable giving tax deduction limits are set by the IRS as a percentage of your income. Similar to 2022, cash contributions in 2023 can make up 60% of your AGI. The limit for appreciated assets in 2022 and 2023, including stock, is 30% of your AGI. Contributions must be made to a qualified organization.
This is where Daffy comes in as an excellent option for a Donor-Advised Fund (DAF). With Daffy, you can start saving more on your taxes and give with confidence. However, it's important to note that in order to take a tax deduction for your charitable contributions in 2023, your total deductions must exceed the standard deduction for your tax filing status. Therefore, understanding all of your eligible tax deductions is crucial to determine how much extra it would take in charitable contributions to exceed the standard deduction.
In conclusion, as you plan your tax strategy for 2023, consider Daffy as your go-to platform for managing your charitable contributions. Not only will you be making a positive impact on the causes and organizations you care about, but you'll also be maximizing your tax 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.