Lower Your Tax Bill Using A Donor Advised Fund (DAF) - Live Case Study!

We'll discuss a case study that demonstrates how a donor-advised fund (DAF) can reduce your tax bill. This will cover the difference between itemized deductions and the standard deduction in detail with a real Schedule A. We will also show how contributions to a DAF can lower your tax bill and explain the advantages of "bunching" charitable donations and using appreciated stocks for contributions. In summary, this guide will provide you with a comprehensive strategy to help you maximize your tax savings using a DAF.
Key Insights 💡
- 💡 Donor Advised Funds (DAFs) are investment funds that provide an easy way to "bunch" charitable contributions, maximizing tax benefits. By combining multiple years of donations into one year, you can exceed the standard deduction and itemize deductions on Schedule A.
- 💡 Schedule A is an essential component of tax planning, as it helps you understand whether itemizing or taking the standard deduction is more advantageous. It includes deductions for medical expenses, state and local taxes, mortgage interest, and charitable contributions.
- 💡 The tax planning software showcased in the video allows you to simulate different scenarios and analyze the impact of DAF contributions on your tax bill. This enables you to make informed decisions about the amount to contribute to your DAF to optimize tax savings.
- 💡 Utilizing appreciated stocks in a DAF is a valuable strategy for reducing your tax bill. By transferring highly appreciated stocks directly to a DAF, you can avoid capital gains taxes and still receive a charitable deduction for the full market value of the stocks.
- 💡 The video emphasizes the importance of timing and strategic planning when it comes to DAF contributions. By aligning contributions with high-income years or taking advantage of appreciated securities, you can maximize your tax savings while fulfilling your charitable goals.
- 💡 The tax savings achieved through DAF contributions can be substantial.
- 💡 Overall, the video provides a comprehensive guide to lowering your tax bill with a DAF, highlighting the benefits of "bunching" contributions, utilizing appreciated stocks, and leveraging tax planning software to optimize your tax strategy.
Highlights 🕒
0:00 📺 Today's topic: How to lower your tax bill with a Donor Advised Fund (DAF).
0:30 📚 Explaining the concept of a DAF and its popularity as a way to bunch charitable contributions.
2:15 💰 Utilizing a DAF to get a full deduction in a given year and distribute the funds over multiple years.
4:45 💡 Exploring different ways to utilize a DAF, including transferring appreciated stocks and resetting basis.
6:30 📊 Live demonstration of the impact of DAF contributions on tax deductions and reducing tax bills.
9:15 📝 Understanding the difference between itemized deductions and the standard deduction.
10:30 💸 Showing the effects of various DAF contribution amounts on tax bills.
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🚨 FREE WORKFLOW ▶ Should I Use A Donor Advised Fund (DAF) When Giving To Public Charities? wealthkeel.co/DAFguide
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Music from Intro Video: Sunburst by Tobu & Itro - bit.ly/2p6JaWw
Disclosures: This information is for general purposes only. This information is not intended to be a substitute for specific professional financial or tax advice, as individual circumstances vary. Please see a financial professional, CPA, and/or an attorney in regards to your own individual situation.

[@thegannondaynes]

Love the content and edits, should be getting way more views with this quality! Subscribed! I get the grind coming from a smaller channel! Would love to connect further!

[@WealthKeel]

Thank you! Appreciate that! 👊

[@Felishad11]

Thank you for this explanation. So, the tax bracket doesn’t have to be lowered through donations (DAF) to receive a tax deduction? Does this apply to federal taxes as well?

[@WealthKeel]

Not sure if I follow your comment exactly, but, with a DAF contribution if it allows you to get over the standard deduction it would help lower your federal tax bill in that year.

[@Felishad11]

@@WealthKeel The tax bracket doesn’t have to be lowered from 37% to 24% in order to receive a deduction from charitable contributions correct?

[@WealthKeel]

@@Felishad11 That's Correct. There is no rule that would require lowering a tax bracket(s) to use a DAF.