How To Save On Taxes With Donor-Advised Funds

June 25| Source: kanchanachitkhamma

Donating to a cause you love could be a great way to leave a mark on your community. One underrated option many donors overlook is a Donor-Advised Fund (DAF). This account gives you the flexibility to structure your donation in any way you see fit and an opportunity to reduce your tax burden.

Major Tax Benefits Of Donor-Advised Funds (DAFs)

By opening a DAF, you have quite a few ways to save on taxes while donating to charities you care about:

Immediate Tax Deduction

Whenever you invest assets into a DAF, you’re eligible for a one-time tax deduction. Once your funds are in the account, they will continue growing tax-free until you decide to donate them to a charity of your choice. However, keep in mind that any funds you invest in this account are non-refundable, so you won’t be able to withdraw them later on.

Estate Tax Deductions

If you know you’re passing a larger estate to your heirs, a DAF can help reduce their tax burden substantially. Depending on how you’re structuring your contributions, a donor can be eligible for up to a 60% deduction of their Adjusted Gross Income (AGI) for a cash contribution. For non-cash assets like securities, you can reduce your AGI by up to 30%.

Reduced Capital Gains Tax

What makes a DAF stand out is the ability to make non-cash donations. Whether it’s cryptocurrency or stocks, you can use a wide variety of appreciated assets to contribute. The best part is that anything you donate will no longer be eligible for capital gains taxes. This tax perk will make sure your charity receives the full value of your gift without tax liabilities getting in the way.

Minimize Your Tax Burden While Supporting Our Mission

When you start a donor-advised fund with Long Island Cares, you can take advantage of the many tax benefits while donating to a cause you care about. We’ll manage all the administrative responsibilities and guide you on structuring your account’s funds as you see fit. This way, you’ll have an easy, stress-free way of giving back.

Are you ready to give back to your community? Consider making a donation or starting your DAF with LI Cares. Together, we can feed thousands of hungry families across Long Island and make a difference. Please contact us at 631-582-FOOD (3663) to learn more.