What are the benefits of opening a DAGF? There are several potential tax benefits available to individuals who make contributions to DAGFs. These benefits include, but are not necessarily limited to, the following: 1. Most contributions to a DAGF are eligible as
an itemized tax deductible donation for the tax year of the contribution. This feature provides you with
the opportunity to utilize your tax deduction immediately, while still allowing you extra time and opportunity to identify 501(c)(3) organizations to which you desire to make donations and spread those donations out over an unlimited period of time.
2. Appreciated securities can be contributed in-
kind, which allows you to avoid capital gains taxes when the securities are sold within the DAGF. 3. Cash basis farmers can contribute commodities in-kind such as grain, soybeans, and corn to the DAGF. Talk to Your Tax Preparer Today All contributions to the DAGF are irrevocable and non-refundable. Therefore, please discuss your long- term charitable giving plans with your legal and tax advisors.
Example 2 demonstrates how “bunching” allows taxpayers to make multiple years’ worth of donations to the DAGF in a single tax year. In Example 2, the taxpayer contributes three years’ worth of donations to the DAGF during Year 1. The aggregated contribution makes it substantially easier for the taxpayer to exceed the standard deduction threshold and receive a tax benefit for their “bunch year,” while simultaneously allowing the taxpayer to distribute the funds to charities of their choice over several years.
1st Quarter 2024 If you have further questions, we invite you to schedule a meeting with one of our experienced Trust and Wealth Management Officers by calling 1-800-899-8858 or by emailing at Trust@HillsBank.com. We look forward to serving you as your trusted advisor.
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Investment products are not a deposit, not FDIC insured, not insured by any federal government agency, carry no bank guarantee, and may go down in value.
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