Are Cryptocurrency Donations Tax Deductible?

Several charity organizations accept cryptocurrency donations, like donations in cash and money or kinds. Therefore the question “are crypto donations tax deductible ? ” is quite common among crypto investors. Charitable donations have long been a popular way for individuals to support their favorite causes and organizations while receiving a tax benefit. In this post, we will look closer at the conditions, amount of deduction allowed, reporting requirements, and online tools provided by the IRS for individuals who make charitable donations of money or in kind, including cryptocurrencies.

Video on Rules for Tax deductions on Cryptocurrency Donations

Are there special rules for cryptocurrency donations?

In general, donations made in cryptocurrency are treated similarly to donations made in cash or other property. 

IRS treats cryptocurrency as “property” for tax purposes. Therefore, cryptocurrency donations follow the rules of donation of property like houses or shares of companies. The fair market value (FMV) of the donated cryptocurrency on the donation date determines the deduction amount. In other words, if you donate cryptocurrency to a qualified charitable organization, you can claim a tax deduction for the FMV of the donated cryptocurrency on your tax return.

The IRS has also issued a relevant Revenue Procedure, specifically Revenue Procedure 2019-24, which guides determining the FMV of cryptocurrency donations. According to this procedure, the FMV of the cryptocurrency is determined based on the published exchange rate of the cryptocurrency on a specific date and time. The procedure also guides taxpayers who receive cryptocurrency as a donation.There are specialized cryptocurrency software that may help you in this regard .

Organizations that accept cryptocurrency donations 

Now that we know the tax implications of cryptocurrency donations let’s take a look at some organizations that accept cryptocurrency donations in the US:

1. The Water Project – This organization provides clean water to communities in sub-Saharan Africa.
2. Electronic Frontier Foundation (EFF) – The EFF defends civil liberties in the digital world.
3. Code.org – This nonprofit organization aims to make computer science education accessible to all students.
4. Heifer International – Heifer International provides livestock and agricultural training to families in need worldwide.
5. The Tor Project – The Tor Project provides anonymous online communication tools.
6. American Cancer Society – The American Cancer Society is a nationwide, community-based voluntary health organization dedicated to eliminating cancer.
7. The Wikimedia Foundation – The Wikimedia Foundation operates Wikipedia and its sister projects.
8. The Internet Archive – The Internet Archive is a non-profit digital library.
9. GiveCrypto – GiveCrypto is a nonprofit organization that distributes cryptocurrency to needy people.
10. Save the Children – Save the Children is an international organization that works to improve the lives of children around the world.

Who is a qualified organization for tax deduction purposes?

If you want to claim a tax deduction for cryptocurrency donations, the IRS must recognize the organization as a qualified charitable organization. Donations made to political campaigns or candidates are not tax-deductible.

Online Tools Provided by the IRS

The IRS provides several online tools to help individuals who make charitable donations. You can visit The Exempt Organizations Select Check tool allows you to search for qualified charitable organizations, and also IRS Tax Exempt Organization Search tool allows you to search for information on tax-exempt organizations.

Cryptocurrency donation platform

The following table compares three popular crypto fundraising solutions for nonprofits: TheGiving Block, Engiven, FundraiseUp and Classy. See the charts below prepared by The Giving Block for a breakdown of featured benefits and offerings from these different crypto fundraising solutions.

* Disclaimer : irstaxapp.cm has no direct or indirect connection or affiliate connection with any of the three platforms mentioned in the aforesaid table.

Conditions for Deducting Charitable Contributions

You can claim a tax deduction for charitable contribution if the following conditions are satisfied :

1. Donation is made to a qualified charitable organization, meaning the IRS has already recognized the organization as tax-exempt under Section 501(c)(3) of the Internal Revenue Code.
2. You must not claim the standard deduction and itemize your deductions on Schedule A of your tax return.
3. You must keep accurate records of your charitable donations, including the organization’s name and address, the donation’s date and amount, and a description of any non-cash contributions.

Amount of Deduction Allowed

The amount of your charitable contribution deduction will depend on the type of donation you make and your income level. In general, the maximum deduction you can claim is 60% of your adjusted gross income (AGI) for cash contributions and 30% of your AGI for donations of appreciated property. You can carry the excess to future tax years if your contributions exceed these limits.

Reporting and Forms Requirements

IRS rule says that to claim a charitable contribution deduction on your tax return, you will need to include the following information on your tax forms:

1. For cash contributions under $250, you must retain a bank record or written communication from the organization showing the organization’s name, the date of the contribution, and the contribution amount.
2. For cash contributions of $250 or more, you must obtain a written acknowledgment from the organization. This acknowledgment must include the name of the organization, the date of the contribution, and the amount of the gift.
3. For non-cash contributions like cryptocurrency donations, you must file Form 8283 with your tax return if the total value of your donations exceeds $500. You must also obtain a qualified appraisal for any donated property worth $5,000.

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