Two key tax benefits you need to knowWhen it comes to charitable giving, a Donor-Advised Fund (DAF) is one of the most tax-efficient vehicles available. DAFs allow donors to contribute various assets, receive an immediate tax deduction, and recommend grants to nonprofits over time. In fact, they are one of the fastest-growing charitable vehicles in the U.S., currently holding over $230 billion in assets. And, with the growing popularity of bitcoin, it’s no surprise that donor-advised funds are evolving to accept cryptocurrencies alongside traditional assets like cash and stocks.But what makes a bitcoin Donor-Advised Fund (bitcoin DAF) unique? Let’s dive into the tax benefits of using a bitcoin DAF for charitable giving and how it can be an incredibly efficient way to reduce your taxable income while supporting the causes you care about.
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29 sats \ 0 replies \ @freetx 11 Mar
The practical benefits of DAFs are two-fold: (a) You get an immediate tax write-off for the full amount (note: You can also "carry-over" that write-off for up to 5 years), and (c) You can contribute to your chosen cause whenever you want. Isn't limited to current tax year.
A practical example:
You had a great year and want to donate $100,000. By contributing to a DAF and then donating the funds from there, you could:
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Get an immediate tax writeoff for $100,000. However suppose writing off $100,000 all in one year wasn't useful to you....well you can carry-over that for up to 5 years, So, you could choose to write off $25,000 this year, $25,000 the second, and $50,000 the third. As long as the full 100,000 was utilized within a 5 year period you are good. This gives you lots of options to utilize higher write-offs during greater income years, and lesser during lesser.
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You could space out the donation of that 100,000 however you wanted. For example you could set it up to give 10,000 per year for 10 years to your chosen charity.
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