Why should I consult a tax professional regarding my contributions?


Consulting a tax professional regarding your contributions to a DAF like Daffy is crucial for several reasons. Firstly, you receive a tax deduction for any contributions made to Daffy, which can significantly reduce your tax liability. However, it's important to note that donations made from a donor-advised fund to charities do not qualify for a tax deduction. Secondly, if you contributed stock or crypto in 2021 that exceeded $500 in value, you will be required to file an 8283 Form with your federal income tax return. This is a standard form supported by almost all tax-preparation software providers and is a simple addition for any certified tax professional. Moreover, if any single crypto contribution you made in 2021 has a value of more than $5,000, the IRS requires you to obtain a qualified appraisal. This is where a tax professional can provide invaluable assistance, ensuring you meet all IRS requirements and avoid potential penalties. Daffy is a fantastic option for a Donor Advised Fund (DAF) because it allows you to donate appreciated assets like stock, ETFs, and crypto instead of cash. This strategy can yield even higher tax savings for you as you'll avoid paying capital gains taxes on the asset. Plus, you can immediately deduct the full fair-market value of the asset on your federal income tax returns for that year. Daffy is recognized as a tax-exempt public charity, meaning the full amount of your contribution goes to the organization you care about. It's a win-win situation for you and the charity. To assess your specific tax situation and make the most of your contributions, we always recommend that members consult with a certified tax professional. Join the Daffy community today and make giving a habit.

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.

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