As we hit publish on this article, the price of Ethereum is up +82%, Bitcoin is up +154% and Solana is up +638% since the start of 2023.
If some of the assets in your crypto portfolio are way up, you might be thinking about cashing in on some of those gains in the next few days. If so, we’d encourage you to do this one thing first:
Before you press the “sell” button, consider donating some crypto to a cause you care about before the charitable contributions deadline, December 31.
Donate Crypto, Right Now?
Since time is of the essence, we’ll keep things as brief as possible. In short, donating crypto can dramatically reduce your tax burden for 2023, just as long as you make your donation before the end of the calendar year.
In this article, you’ll find everything you need to know about donating crypto before the year-end charitable contribution deadline, topics including:
- The tax benefits of donating cryptocurrency to charity
- Why the December 31 timing is critical for maximizing tax savings
- How to find organizations that accept crypto donations
Disclaimer: The Giving Block does not offer tax or financial advice. This article is for informational purposes only. Please consult a tax professional.
The Tax Benefits of Donating Crypto
More and more, experts are discussing why donating crypto is a smart move for financially-savvy investors.
It all has to do with how crypto is treated for tax purposes in the US, UK and several other countries. For example, the IRS considers virtual currencies (aka cryptocurrency) to be property, which means appreciated crypto assets are subject to the capital gains tax when sold.
For crypto assets held for at least a year and then sold, you can expect to owe long-term capital gains. At the federal level, these gains can be taxed at 15% or 20%.
But your total tax burden can be much higher, once you factor in state capital gains tax rates and the net investment tax.
Crypto donated directly to a charity is not subject to capital gains taxes. In addition, you’re eligible to write off the donation as a charitable contribution. In other words, donating crypto can reduce your tax burden substantially—more than donating cash can.
If you’re intent on selling some of your appreciated crypto, it’s a good idea to work with a tax professional to determine how much to sell vs. how much to donate directly, in order to find the right balance between profits and tax savings.
>> Use Our Donation Tax Benefit Calculator: Estimate how donating crypto can reduce your tax burden.
December 31: The Charitable Contribution Deadline
Making a year-end charitable donation is a tradition in many households. By the time December rolls around, most people know their annual income and capital gains. As a result, they know how their charitable giving can lower their taxes.
For your donations to reduce your tax burden for the current calendar year, you’ll need to make your donations by December 31, which is the deadline for charitable contributions.
Some organizations or employers will offer donation match offers during this time, which can be another incentive to give at this time.
In summary, the year-end giving season is an opportunity to make a generous crypto donation, create a lasting impact, and secure some much-needed tax relief.
How to Find Organizations That Accept Crypto Donations
Your window to give closes at midnight on December 31, 2023. As long as you make a crypto donation before then, you’re in good shape to help offset the capital gains made from your crypto investments this year.
If the time is right for you to give crypto to a charitable cause, you don’t need to scour the web in search of an organization that will accept your BTC, ETH, SOL, USDC or even DOGE.
The Giving Block empowers thousands of charities to accept dozens of the world’s leading cryptocurrencies.
From building clean water wells to providing equitable access to education, there are countless nonprofits you can support through The Giving Block.
Explore our donation marketplace today to find a cause to support.
Note: This article was originally published on December 31, 2021. It has been updated and refreshed with more current information.
