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How donating bitcoin and other cryptocurrencies directly to charity increases the size of your gift
Before you sell bitcoin and donate the after-tax proceeds, consider donating your bitcoin directly to charity. This model includes two significant benefits, both for you and the charity:
There’s another upside to donating bitcoin to a public charity with a donor-advised fund program such as Fidelity Charitable: the opportunity to recommend how the contribution is invested and potentially grow it tax-free, ultimately providing greater charitable/philanthropic support.
Did you know?
Fidelity Charitable accepts Bitcoin, Bitcoin Cash, Ethereum and Litecoin.
Contributing bitcoin to Fidelity Charitable means your tax deduction and your charitable gift may instantly increase over 20%. Charities are exempt from paying capital gains on the sale of assets, so the full value of your gift stays intact. Consider this example:
1This assumes all realized gains are subject to the maximum federal long-term capital gains tax rate of 20% and the Medicare surtax of 3.8%. This does not take into account state or local taxes, if any.
2Amount of the proposed donation is the fair market value of the appreciated property held more than one year that you are considering donating as determined by a qualified appraisal.
3Tax basis assumed to be $300,000. If you sold the bitcoin for $1,100,000, you would have $800,000 in capital gains and would pay $190,400 in tax.