Please consult your tax advisor regarding your individual situation. This article for informational purposes only and may not be accurate for your situation.
In the United States, donating cryptocurrency comes with significant tax advantages. Unlike selling crypto and donating the cash proceeds, donating cryptocurrency itself is not considered a taxable event. Maximize your impact by donating appreciated cryptocurrency and enjoy the following benefits:
Avoid Capital Gains Tax: By donating appreciated cryptocurrency, you can bypass the capital gains tax that would apply if you were to sell the crypto and then donate the cash proceeds. This can result in substantial tax savings and maximize the impact of your charitable giving, because the nonprofit receiving your gift will not need to pay capital gains tax. This means more resources for the nonprofit's mission.
Full Fair Market Value Deduction: You are generally allowed to deduct the full fair market value of the cryptocurrency at the time of donation on your taxes if you have held it for over a year. This means you can claim the current value of the cryptocurrency as a deduction, providing potential tax savings.
It is important to note that if you have held the cryptocurrency for less than a year, the tax deduction is typically limited to the cost basis, representing the original purchase price of the cryptocurrency rather than its current market value.
Donating cryptocurrency not only supports the causes you care about but also offers you the opportunity to optimize your tax strategy and leverage the financial advantages associated with crypto donations. Join the growing community of crypto donors and make a difference today.