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    Home»Bitcoin»Things to Know About Donating Bitcoins for the Benefit
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    Bitcoin

    Things to Know About Donating Bitcoins for the Benefit

    AdministratorBy Administrator13.12.2021No Comments4 Mins Read
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    Bitcoin is an investment for a better future, but today there are many opportunities to make a positive impact with Bitcoin. Donating bitcoin to charity can be a great strategy to make a difference while reducing the overall tax burden.

    However, before signing, sealing and delivering a gift, there are a few things to consider. This is a simple introduction to using Bitcoin for charitable purposes.

    Stop and Think Before Selling

    If you decide to make a donation, your first instinct might be to sell bitcoins to monetize your organization. This can leave you with a lot of tax.

    In the United States and many other countries, Bitcoin is viewed as a tax asset, as are stocks, bonds, and collectibles. This means that if you sell bitcoins for a profit, you are expected to pay capital gains taxes. Capital gains tax surprises investors every year. If you are selling a lot of bitcoins, your tax liability can be very significant.

    To avoid this trap, you need to donate bitcoins directly to charity. Your gift goes even further and you can enjoy the benefits of tax deductions while avoiding the disadvantages associated with capital gains tax.

    There are many charities today that already accept bitcoins, including those that support the development of open source bitcoins.

    Preparation for paperwork

    If you are requesting a Bitcoin donation as a tax credit, you will need to go through the appropriate channel and have the appropriate documentation. The IRS requires donors requesting a deduction of more than $ 500 for non-cash donations to file Form 8283.

    Get a qualified rating

    Getting a qualified rating is an important step for making a larger donation.

    By working with a qualified appraiser, you can provide a clear document of the fair market value of your donation. Bitcoin prices can fluctuate and simply hovering over a chart is not enough. A qualified appraisal is required if you donate more than $ 5,000 in Bitcoin in a specific year. Basically, this is additional information that you need to fill out on Form 8283.

    An appraisal can cost hundreds of dollars, so it is not worth doing if the total donation is below the threshold set by the IRS.

    Get ready for dialogue

    Bitcoin has been around for over a decade, but it’s still a novelty in the world of charitable giving. Non-profit organizations are immersed in the world of traditional finance. So if your organization is not used to accepting bitcoins, then you shouldn’t be surprised. You may ask first, or some education may be required.

    Recognized charities tend to have many formal structures related to finance, so a multi-stakeholder approval may be required to donate bitcoins. Usually, organizations have an investment committee or board of directors to determine financial matters, and the rules for capital allocation can be reflected in the organization’s articles of association. For example, an organization’s charter may require bitcoin to be converted into cash rather than remaining on the balance sheet. To maintain tax exemption status, organizations need to carefully review their financial rules.

    Can’t you convince your favorite organization to accept Bitcoin directly? Don’t worry – you can donate dollars upon successful BTC liquidation without capital gains! Just create a donor recommended fund with FidelityCharitable. They accept your bitcoin directly and you can get a good reputation for this donation. You can then instruct Fidelity on how to donate the dollar proceeds to select charities.

    Know where your gift is going

    The most rewarding part of donating bitcoin is seeing its impact. If you have a specific vision, you need to communicate this to your charity so that gifts can be appropriately distributed. Charitable organizations tend to use uncategorized gifts for their own financial initiatives.

    Support also does not have to be one-time. Donor-recommended foundations can also provide your organization with a long-term gift. This type of arrangement allows organizations to control their investment in paper and allows you or your heirs to make grants or propose initiatives. This setting allows you to leave a legacy for generations and have a deeper impact.

    Bitcoin is the best money for a better world. Charitable donations can deliver on that promise and reduce your tax liabilities. It is mutually beneficial for everyone!




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