What are the potential tax benefits of donating crypto?
Donating crypto directly to charity can save you money on two types of taxes:
- Avoid paying any capital gains tax on your crypto gains.
- Receive a federal income tax deduction for the full value of your crypto (state and local income tax deductions may also be available).
An alternative is to sell your crypto and donate the cash proceeds, but you would first owe capital gains tax on the appreciation, resulting in higher taxes for you and less dollars going to furthering the mission of the charity.
How can I claim a tax deduction for crypto donations?
The process of claiming a tax deduction for cryptocurrency donations depends on the value of the deduction. If your deduction is for an amount below $500, you can simply report the charitable deduction on your annual income tax return filing. Save any donation receipt you receive at the time of your gift as support for the deduction you’ve claimed.
To claim a tax deduction for amounts greater than $500, you must file IRS Form 8283 along with your tax return for the year in which your gift was made. Form 8283 is where you will provide the IRS certain details regarding your gift, which help establish your eligibility for the tax deduction.
If you are claiming a deduction for gifts valued above $5,000, you will also need to obtain a qualified appraisal of the donated assets, which establishes their value to the IRS. The appraiser will complete the “Declaration of Appraiser” contained in Part IV of your Form 8283. You will also want to share a copy of your partially completed Form 8283 with the done, who will complete the “Donee Acknowledgement” and return the form to you.
You can access Form 8283 and the Instructions for Form 8283 on the IRS website. If you need help completing the form, you should speak with your tax professional.
How can I make a donation of cryptocurrency to WashU?
Please contact Russ Austin in the Office of Planned Giving at austinr@wustl.edu or 314-935-5203.