Cryptocurrencies were originally created as a means for secure and low-cost global digital payments. Bitcoin, for instance, is a top digital currency that can be theoretically used for making payments anywhere in the world. But, did you know you could also donate cryptocurrencies to your favourite charitable causes around the world?
There are a number of nonprofits globally that accept donations via crypto. In fact, donating using crypto has become quite popular in the past couple of years due to increased flexibility, privacy and convenience.
Many people who have donated or are planning to donate in cryptocurrency wonder if their crypto donations are tax-deductible. Let’s find the answer here.
Donations using cryptocurrencies are comparatively secure, private and easy. You can donate to your favourite charitable entities around the globe with just a few clicks on your phone. Moreover, depending on your country of nationality, you may also get a tax deduction on your crypto donations.
The tax deduction on crypto donations may depend on a number of things, including the country of the donor, type and country of donation (charity organization), etc.
How to get tax benefits on your crypto donations?
If you are looking to get a tax deduction on your donations in cryptocurrencies, you must first enquire about whether a particular donation you are planning to make to a specific charity in your country or in another country is eligible for a tax rebate.
In the USA, there are a number of charities and nonprofits that accept donations via cryptocurrencies, which are also tax-deductible. “The IRS classifies cryptocurrency donations as property, meaning they are not subject to capital gains tax and are tax-deductible,” according to the Save the Children website.
In other cases, some countries may provide tax relief only for crypto donations that are made to charities in that particular country. That means if you are donating crypto to help a nonprofit in a different country than where you live, you might not get a tax benefit.
For example, the recent 50 trillion Shiba Inu coins (worth ~$1 billion USD) donation by Ethereum co-founder Vitalik Buterin to help India fight the COVID-19 pandemic was not tax-deductible. “He won't get a tax write-off. He is taxed as a Singaporean citizen and is not eligible,” said a leading newspaper.
But, this isn’t always the case. So, you must research tax rules on crypto donations in your country to know more.
Which nonprofits should I donate cryptocurrencies to for tax deduction?
According to the IRS, cryptocurrencies will be treated as property for tax purposes, which means a donation of cryptocurrencies is tax-deductible and is not subject to capital gains tax. This means donors can get double tax benefits for donating to the right nonprofits.
But, how do you find the right charitable organizations for tax-deductible crypto donations?
Well, in the US and many other countries, all cryptocurrency donations to a registered 501(c)(3) nonprofit are exempt from paying compatible gains tax. In addition, in the right circumstances, you could even get a charitable contribution tax deduction on your donations made using cryptocurrencies.
Easiest and Best Way to Help Those in Need through Cryptocurrency
Did you know there is a better, easier and much less complex way to help the people in need around the globe through cryptocurrencies? Charity-based cryptocurrencies are on the rise these days. SOUL Token is one of the best examples.
When looking to help those in need through charitable contributions, all you need to do is buy and hold SOUL tokens.
The SOUL team will make routine donations to official (verified) charities around the globe using tokens that are allocated for this particular purpose. In exchange for their contribution, SOUL token holders get to earn reward tokens that are credited at fixed intervals.
Moreover, as a SOUL token holder, you are saved from the complexity of taxation on crypto donation.
To know more about how donations work with the SOUL token and the list and schedule of donations, visit http://soultoken.fund.