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DONOR ADVISED FUNDS : YEAR END TAX TIP



If you regularly donate $2500 or more each year to charities, please read on.........


Donor Advised Funds (DAF) may be helpful to you. These are accounts set up with brokerage firms. Instead of you making a direct donation from your personal funds to a charity, you make a deposit from your personal funds into the DAF. Then when you donate to the charity, the funding comes from the DAF, not your personal account.


Contributions into the DAF are tax deductible in the year of payment. Meaning that even if you don't make a payment to a charity from the DAF that year, you still get a tax deduction. Because you funded the DAF.


DAF's are best suited for someone who regularly donates, but may not always know which charity they would like to fund or when. The DAF gives you a regular annual tax deduction for amounts funded.


Even better, it reduces the paperwork you have to track. That's because in the year that you donate from the DAF, you don't need to send me (for tax prep) any documentation. The tax deductions I claim for you are based on DAF funding. Which will usually only be one or more payments.


When you eventually donate from the DAF to the charity, I don't need to see that paperwork. So much easier for you at tax time.


Keep in mind that funding a DAF with appreciated stock is allowed.


DAF funding for 2023 is due December 31. You have plenty of time to work with your brokerage firm to have this setup. Fees, if any, should be minimal


Hope this helps. Please let me know if you have questions.

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