Donor-Advised Funds

What is a donor-advised fund?

A donor-advised fund (DAF) is a charitable giving account controlled by a Section 501(c)(3) organization. This is known as your sponsoring organization and they control the fund, that you contribute to. You control when the money is distributed and who receives the money, but the fund owns the assets in your account. For example, if you add $10,000 dollars worth of assets to your fund’s account, you would receive $10,000 in charitable deductions that year. Then, you can decide when you want to donate assets from the account. Any assets you don’t distribute continue to grow tax-free, but they are now owned and controlled by the sponsoring organization. Depending on when you distribute your assets and the rate at which your account grows, you will likely be able to donate more than the initial contribution of $10,000.

What can you contribute?

You can donate many types Read More

Minnesota pass-through entity tax credit

History/ legislation

Taxpayers that itemize their deductions can deduct certain state and local taxes (SALT). These SALT deductions can include property, income, and sales tax. Although all three are eligible, taxpayers must choose between deducting income tax or sales tax, while property taxes are always eligible. In 2017, when the Tax Cuts and Jobs Act was signed, the previously unlimited SALT deductions became limited to $10,000. Many pass-through entity (PTE) owners located in states with high income taxes paid more than $10,000 in state income taxes alone. So, once the new limit was put into effect, many owners couldn’t deduct as much as they previously could on their federal tax returns.

In November of 2020, the IRS issued Notice 2020-75, which vindicated a workaround to this credit. This prompted many states that hadn’t already implemented an elective Pass-through Entity (PTE) tax to do so. In Minnesota, the new PTE tax election Read More

2021 Enhanced Child Tax Credit

On March 11, 2021, President Joe Biden signed into law the American Rescue Plan Act (No. 117-2). Under this Coronavirus relief package, the child tax credit was expanded. The previous credit of $2,000 per child under the age of 17 increased to $3,000 for children ages 6-17 (17-year-olds became eligible), and $3,600 for children under the age of 6. A portion of these tax credits were paid in advance unless you opted out of the payments or weren’t eligible. They are also fully refundable, meaning any credits not used by the taxpayer will be paid out to them. Although the maximum child tax credit has been increased, not everyone will get the entire expanded tax credit per child.

How much will I receive per child?

The number of credits you are eligible for depends on your Adjusted Gross Income (AGI),  number of children, and their age. You can enter your information Read More