You can reduce your tax liability if you act before the end of the year.
Now’s the time to get a deduction or offset your gains. In April, it is too late!
It’s that time of year again, where you have a chance to make tax-deductible donations to reduce your taxable income and capital gains, while also helping others and giving back. Donating bitcoin and other cryptocurrencies can have exceptional benefits for your pocket as well as the causes you support.
Cryptocurrency returns in 2020 have been higher than any year since 2017. Make a donation in cryptocurrency by December 31, 2020 to offset paying up to 37% in short term capital gains or 20% in long term capital gains when you file next year. You can calculate your cryptocurrency gains with our partner Bitcoin.Tax to make donating to offset or reduce your tax liability easy! Here’s a recent Bitcoin.Taxes podcast with our Founder Connie Gallippi and Matt Metras, a cryptocurrency tax pro, about the tax benefits of donating:
Save Money by Donating Crypto:
We’ve put together some information below that we hope you find useful this tax season and year-round.
Background:
- Donations must be made BEFORE TAX YEAR END (December 31)
- Capital gains on BTC and other cryptocurrencies are taxable
- The market is at an all time high, and depending on when you first bought your cryptocurrency you may still have short and/or long term gains
- The IRS is now fully aware of the potential taxable gains from cryptocurrency and has added a question regarding cryptocurrency to the 1040 form and issued warning letters to suspected cryptocurrency holders
The Basics:
- Donations are a great way to give back & reduce your tax liability
- IRS guidance defines bitcoin as ‘property’
- Donor has the onus to value the donation in USD
Options for write-offs:
- Make a typical charitable donation: convert BTC to USD, pay taxes on the gains, and then donate in USD … but why pay taxes when there are other options?
- Choose a charity that accepts bitcoin and other cryptocurrencies: get the write-off or offset, but know that the majority of charities will immediately convert your cryptocurrency donation into USD.
- Donor-advised fund: donate in BTC (or other cryptos?) with the help of a management fund and choose among charities they offer (the Fund converts your contribution to USD and makes a contribution to the charity) or …
- BitGive and projects on GiveTrack!
Quadruple the Benefit with BitGive:
- Offset capital gains to reduce or eliminate tax liability
- We hold in cryptocurrency, so the value keeps growing
- Any gains we continue to receive are tax free, allowing us to have even more impact!
- We encourage and assist nonprofits in using Bitcoin and Blockchain technology to leverage it’s benefits of faster, cheaper, more secure transactions; as well as reduced risk and increased transparency … vs. just cashing out automatically in traditional currencies.
Bitcoin.Tax Can Help:
- Calculate short- & long- term gains across multiple bitcoin and cryptocurrency accounts
- Calculate the option to donate to offset gains
- Go learn more now at Bitcoin.Tax while you still have the opportunity to reduce your tax liability and help others!
Donating cryptocurrencies can really make an impact! Your donations help those in need, and can also provide tax benefits.
Tips for Navigating the Process:
- IRS Form 8283, Section A is required for gifts of property valued over $500
- IRS requires an appraisal for donations of property that are valued over $5K
Options to Support:
- Donate to BitGive, first Bitcoin and Blockchain technology nonprofit 501(c)(3)
- Visit GiveTrack and choose one of our global NGO partner projects
PLEASE NOTE: This is not official tax or legal advice. Please consult your tax adviser for information about appropriate filing and record keeping.