Can you donate crypto to charity?

You can donate crypto to a charity that accepts it, either directly or through an intermediary that converts it to cash. In the United States, a crypto donation can support a tax deduction for people who itemize, but the paperwork is stricter than for cash or listed shares. In the UK, gifts of tokens to charity are generally outside Capital Gains Tax.

Is there a crypto donation tax deduction?

Yes, under IRS rules, for donors who itemize deductions on Schedule A. The amount depends on how long you held the crypto:

• Held more than one year. The deduction is generally the fair market value when donated.
• Held one year or less. It is generally the lower of your cost basis and fair market value.

CNBC has reported that donating crypto held more than a year can let the donor avoid capital gains tax on its rise in value, compared with selling it first. It also noted that deductions for such gifts are generally capped at 30% of adjusted gross income, with a five-year carryover. Selling would normally be a taxable disposal, as how crypto is taxed in the US explains.

When do you need Form 8283 for crypto?

Form 8283 reports noncash charitable gifts. The IRS instructions say you must file it if your deduction for a noncash gift is more than $500. The instructions define digital assets to include cryptocurrency, stablecoins and NFTs.

For deductions over $5,000, the charity generally signs the form to confirm it received the gift. The IRS notes that the signature does not mean the charity agrees with the appraised value. A charity that sells or otherwise disposes of the asset within three years may have to file Form 8282.

For gifts of $250 or more, the donor also needs a written acknowledgment from the charity.

Do you need a qualified appraisal for a crypto donation?

Yes, if the deduction is over $5,000. The IRS says a qualified appraisal is required, and the appraisal itself must be attached to the return when the deduction is over $500,000.

Some donors assumed an exchange price was enough. In Chief Counsel Advice 202302012, released in January 2023, the IRS looked at a taxpayer who claimed a $10,000 deduction using an exchange quote and no appraisal. It concluded the deduction should be disallowed. The memo reasoned that the appraisal exceptions cover publicly traded securities and a few other assets, and crypto is not a security for this purpose. Such memos are not binding precedent, but they show the IRS position.

CNBC reported appraisal fees of roughly $100 to $600 in 2021.

How does it work in the UK?

HMRC says tokens donated to charity are not subject to Capital Gains Tax, with exceptions such as tainted donations or sales to a charity for more than the original cost. More country comparisons are in crypto tax around the world.

Rules differ by country and change often. Check the tax authority or a qualified professional for your own situation.