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29 sats \ 0 replies \ @freetx 11 Mar \ on: What is a bitcoin donor-advised fund and why do they matter? bitcoin
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.