{"id":9067,"date":"2024-12-05T11:16:48","date_gmt":"2024-12-05T11:16:48","guid":{"rendered":"https:\/\/finderica.com\/watch-for-these-pitfalls-before-donating-crypto-to-charity\/"},"modified":"2024-12-05T11:16:48","modified_gmt":"2024-12-05T11:16:48","slug":"watch-for-these-pitfalls-before-donating-crypto-to-charity","status":"publish","type":"post","link":"https:\/\/finderica.com\/?p=9067","title":{"rendered":"Watch for these pitfalls before donating crypto to charity"},"content":{"rendered":"<div id=\"SpecialReportArticle-ArticleBody-6\" data-module=\"ArticleBody\" data-test=\"articleBody-2\" data-analytics=\"SpecialReportArticle-articleBody-6-2\"><span class=\"HighlightShare-hidden\" style=\"top:0;left:0\"><\/span><\/p>\n<div class=\"InlineImage-imageEmbed\" id=\"ArticleBody-InlineImage-108064494\" data-test=\"InlineImage\">\n<div class=\"InlineImage-wrapper\">\n<div>\n<p>Hispanolistic | E+ | Getty Images<\/p>\n<\/div>\n<\/div>\n<\/div>\n<div class=\"group\">\n<p>If you&#8217;re planning a gift to charity this holiday season, you could score a tax break by donating cryptocurrency. But there are some key things to know before making the transfer, experts say.<\/p>\n<p>In 2024, there&#8217;s been a significant jump in crypto gifts to charity, according to Fidelity Charitable, which has accepted $688 million in crypto donations \u2014 mostly in <span class=\"QuoteInBody-quoteNameContainer\" data-test=\"QuoteInBody\" id=\"SpecialReportArticle-QuoteInBody-4\">bitcoin<span class=\"QuoteInBody-inlineButton\"><span class=\"AddToWatchlistButton-watchlistContainer\" id=\"-WatchlistDropdown\" data-analytics-id=\"-WatchlistDropdown\"><button class=\"AddToWatchlistButton-watchlistButton\" aria-label=\"Add To Watchlist\" data-testid=\"dropdown-btn\"><span class=\"AddToWatchlistButton-addWatchListFromTag\"><\/span><\/button><\/span><\/span><\/span> \u2014 through Nov. 19. By comparison, the public charity received <a href=\"https:\/\/www.fidelitycharitable.org\/content\/dam\/fc-public\/docs\/insights\/2024-giving-report.pdf\" target=\"_blank\" rel=\"noopener\">$49 million in digital currency in all of 2023<\/a>.<\/p>\n<p>Donating crypto to charity is similar to giving other types of property. But &#8220;there are some pitfalls,&#8221; said certified financial planner Juan Ros, a partner at Forum Financial Management in Thousand Oaks, California.\u00a0<\/p>\n<\/div>\n<div class=\"group\">\n<div class=\"RelatedContent-relatedContent\" id=\"SpecialReportArticle-RelatedContent-1\">\n<div class=\"RelatedContent-container\">\n<div class=\"RelatedContent-nonCollapsibleContent\">\n<h2 class=\"RelatedContent-header\">More from FA Playbook:<\/h2>\n<div class=\"group\">\n<p>Here&#8217;s a look at other stories impacting the financial advisor business.<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<h2 class=\"ArticleBody-subtitle\"><a id=\"headline0\"><\/a>Donate &#8216;the most highly appreciated asset&#8217;<\/h2>\n<div class=\"group\">\n<p>Since 2018, the higher standard deduction has made it harder to claim itemized tax breaks for charitable gifts, medical expenses, state and local taxes, among others.\u00a0<\/p>\n<p>But if you itemize and can claim the charitable deduction, it&#8217;s generally better to donate profitable investments, such as cryptocurrency, rather than cash.<\/p>\n<p>By donating crypto to charity, you can bypass capital gains taxes and claim a deduction based on its fair market value, assuming you&#8217;ve owned it for more than one year. The tax break has a cap of 30% of your adjusted gross income for public charities.<\/p>\n<\/div>\n<div class=\"group\">\n<p>It&#8217;s an attractive strategy for crypto investors because bitcoin and other coins could be &#8220;the most highly appreciated asset in their portfolio,&#8221; said Kyle Casserino, vice president and charitable planning consultant for Fidelity Charitable.<\/p>\n<p>The price of bitcoin was around $96,000 on Dec. 4, up by nearly 120% year-to-date, according to Coin Metrics.<\/p>\n<p>However, donating crypto can be more complicated than assets like stock, experts say.<\/p>\n<\/div>\n<h2 class=\"ArticleBody-subtitle\"><a id=\"headline1\"><\/a>Some charities don&#8217;t accept crypto<\/h2>\n<div class=\"group\">\n<p>&#8220;Not every charity is willing or able to accept gifts of crypto,&#8221; so you&#8217;ll need to contact the organization first, Ros said.\u00a0\u00a0\u00a0<\/p>\n<p>As of January, 56% of the biggest U.S. charities <a href=\"https:\/\/thegivingblock.com\/resources\/why-americas-top-charities-accept-crypto-donations\/\" target=\"_blank\" rel=\"noopener\">accepted cryptocurrency donations<\/a>, according to The Giving Block, a platform for digital currency gifts and fundraising. That&#8217;s <a href=\"https:\/\/thegivingblock.com\/resources\/why-americas-top-charities-accept-crypto-donations\/\" target=\"_blank\" rel=\"noopener\">up from 49%<\/a> the previous year. \u00a0<\/p>\n<p>However, most large donor-advised funds are &#8220;well-equipped&#8221; to accept digital currency, Ros said.<\/p>\n<p>Donor-advised funds are investment accounts that work like a charitable checkbook. The donor receives an upfront deduction and can transfer funds to eligible nonprofit organizations later.\u00a0<\/p>\n<p>Typically, the donor-advised fund sells the crypto and reinvests the proceeds. But some allow investors to <a href=\"https:\/\/www.prnewswire.com\/news-releases\/a-crypto-first-at-consensus-2022-ren-and-the-giving-block-partner-to-give-crypto-donors-more-investment-options-in-a-donor-advised-fund-301563581.html\" target=\"_blank\" rel=\"noopener\">continue holding<\/a> digital assets in the fund.<\/p>\n<\/div>\n<h2 class=\"ArticleBody-subtitle\"><a id=\"headline2\"><\/a>You may need a &#8216;qualified appraisal&#8217;<\/h2>\n<div class=\"group\">\n<p>When you give a profitable investment owned for more than one year, your deduction is based on the fair market value of the asset.<\/p>\n<p>That&#8217;s easy for publicly traded stock, but the IRS requires <a href=\"https:\/\/www.irs.gov\/pub\/irs-pdf\/p526.pdf\" target=\"_blank\" rel=\"noopener\">added documentation<\/a> for digital assets worth more than $5,000, according to Andrew Gordon, a tax attorney, certified public accountant and president of Gordon Law Group.<\/p>\n<p>&#8220;You&#8217;ve got to be able to support that deduction through the qualified appraisal,&#8221; which has specific <a href=\"https:\/\/www.irs.gov\/publications\/p561#en_US_202312_publink1000258031\" target=\"_blank\" rel=\"noopener\">IRS requirements<\/a>, he said.<\/p>\n<p>For example, you must file <a href=\"https:\/\/www.irs.gov\/pub\/irs-pdf\/f8283.pdf\" target=\"_blank\" rel=\"noopener\">Form 8283<\/a> with your tax return and keep a copy of the appraisal. But if the donated assets exceed $500,000, you must include the appraisal with your return, according to the IRS.<\/p>\n<p>You need to follow the IRS appraisal criteria &#8220;to the letter,&#8221; Ros explained. Otherwise, you could put your charitable deduction at risk in the event of an audit.<\/p>\n<\/div>\n<\/div>\n<p><a href=\"https:\/\/www.cnbc.com\/2024\/12\/04\/donating-crypto-to-charity-pitfalls.html\" target=\"_blank\" rel=\"noopener\">Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Hispanolistic | E+ | Getty Images If you&#8217;re planning a gift to charity this holiday season, you could score a tax break by donating cryptocurrency. But there are some key things to know before making the transfer, experts say. In 2024, there&#8217;s been a significant jump in crypto gifts to charity, according to Fidelity Charitable,<\/p>\n","protected":false},"author":1,"featured_media":9068,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"rank_math_lock_modified_date":false,"footnotes":""},"categories":[196],"tags":[2583,58,3196,3366,1074],"class_list":{"0":"post-9067","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-finance-news","8":"tag-charity","9":"tag-crypto","10":"tag-donating","11":"tag-pitfalls","12":"tag-watch"},"_links":{"self":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts\/9067","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=9067"}],"version-history":[{"count":0,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts\/9067\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/media\/9068"}],"wp:attachment":[{"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=9067"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=9067"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=9067"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}