Could you be missing out on tax-savings opportunities?

Many people do not prepare for the impact of taxes on their investment and retirement accounts until they have been negatively affected by them. As we move into tax season, now is a great time to begin thinking about strategic and tactical tax planning for 2021 and beyond. Over the next several weeks we will be posting some valuable tips on how to cut or minimize taxes.

Tax Tip #4 –  Open a Donor Advised Fund

A Donor-Advised Fund, or DAF is an account in which to hold charitable donations. Donors can place cash, securities, or other assets into the DAF account and receive a tax deduction in the year in which it is funded. Funds in the DAF will grow tax free, and the donor has significant control over the placement and distribution of the gifts, which can be gifted at any time to a number of public charities.

Traditionally, donations are federally tax deductible, by up to 60% of the taxpayer’s AGI for cash contributions, and up to 30% of the AGI for securities. DAF’s have some great benefits, for example if you donate stock to the DAF, neither you nor the DAF pay a capital gains tax when the stock is sold to donate to a charity of your picking. DAF’s are also a great way to involve children/beneficiaries in the giving process.

For more information on the great features of a DAF, check out this video!

Check out our other posts to understand how to CUT YOUR TAX BILL IN 2021!

• #1 Take advantage of employer sponsored savings plans – including HSA’s, FSA’s, 401k’s, and others
• #2 Pay attention to available tax credits – often people are unaware of tax credits available to them and how to best use them
• #3 Use Tax Losses –   Known as tax-loss harvesting, this can be an effective way to minimize taxes from one year to the next
• #4 Open a Donor Advised Fund (DAF) –  A DAF, is a great way to lower your tax base while offering flexible opportunities to donate to charities and nonprofits of your choice
• #5 Tax Efficient Investing –  There are definitely was to invest that are advantageous from a tax-perspective depending upon your individual situation. This is affected by total assets (including property), individual tax bracket, international holdings, long and short term objectives just to name a few.

DISCLOSURE: The material above is for informational purposes only and should not be interpreted as legal, tax or financial advice. Always consult your CPA/tax advisor/attorney to discuss your specific situation.