The Cash Flow Clock: For Retirees - Book - Page 63
The Cash Flow Clock
eliminated. It is tax free to the charity and tax free to
us.
While donating appreciated assets makes the growth
tax free, the only way to get a tax deduction on the
principal that is donated is to itemize our deductions
on our tax return. Mortgage interest, property taxes,
medical expenses, and other costs can be deductible
along with our charitable donations. But itemizing
our deductions is only beneficial if our total
deductions exceed the standard deduction. Currently,
standard deductions are really high (they will be
reduced in 2026) so fewer taxpayers are itemizing.
Even if itemized deductions are a bit higher than the
standard deduction, the tax benefit of our charitable
donations is minimal.
In order to maximize our itemized deductions, we can
utilize something called a Donor Advised Fund
(DAF). These funds allow us to receive an
immediate itemized deduction for any assets we are
planning to donate to charity (any charity) in the
future. These assets can grow and we can decide
when and how to donate them. The only downside is
that we have to give up control of these assets by
transferring them into the DAF in order to get the
deduction. We cannot get them back for our own use
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