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What is the strategy of bundling multiple years’ worth of donations together?

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The strategy of bundling multiple years’ worth of donations together, also known as "bunching," is a tax strategy that allows you to maximize your tax savings. This strategy involves grouping your charitable contributions for multiple years into a single year so that you can itemize your tax deductions in one year and take the standard deduction in the other years. For instance, if you're a single tax filer who wants to give $5,000 a year to charity, you could double that amount by bundling two years of contributions in one tax year. This would amount to $10,000, and then you can easily reach the $12,950 standard deduction threshold with other common tax deductions, like mortgage interest. Daffy is a great option for a Donor-Advised Fund (DAF) because it allows you to make a large contribution in one year and then spread out your charitable giving over the next two or three years. This means you can take advantage of the tax benefits of bunching while still supporting your favorite charities over time. Moreover, Daffy allows you to invest your funds with tax-free growth, further enhancing the benefits of this strategy. So, if you're looking to maximize your tax savings while supporting the causes you care about, consider using Daffy for your DAF.

Please note that the information contained on this page is for educational purposes only and should not be considered tax advice. Any calculations are intended to be illustrative and do not reflect all of the potential complexities of individual tax returns. To assess your specific tax situation, please consult with a tax professional.

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