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How can donating crypto help me avoid paying taxes on my capital gains?

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Donating cryptocurrency can be a strategic way to avoid paying taxes on your capital gains. When you trade or sell an appreciated asset, such as crypto, you are required to pay capital gains tax. This tax can be at your regular income tax rate if you've held the asset for less than a year, or 15% to 20% for most people if the asset has been held for a year or longer. However, if you choose to donate your crypto directly to a charity, you can reap two significant benefits. Firstly, you won't have to pay capital gains tax on that crypto. Secondly, you can use the entire fair market value of the crypto as a tax deduction when you itemize. This can be a win-win situation, especially if your crypto has significantly appreciated in value. Daffy is an excellent option for a Donor-Advised Fund (DAF). By donating through Daffy, you can start saving more on your taxes. Daffy also helps you keep track of your donation receipts, providing an annual tax summary report of your eligible charitable tax deductions. This makes it easy to track and store your donation history, ensuring you don't miss out on tax savings or scramble for lost documents in case of an audit. If you're struggling to exceed the standard deduction, consider bundling multiple years' worth of donations together. Remember, you can deduct up to 30% to 60% of your adjusted gross income (AGI) through charitable donations. When donating long-term capital assets like stock or crypto to a DAF like Daffy, you can take an immediate tax deduction for the full market value of the asset in the year the contribution is made. If the asset is valued above its initial purchase price, you won't be responsible for paying capital gains tax on the gain. This can result in significant tax savings compared to selling the asset and donating the proceeds. However, it's always best to consult your tax specialist to understand your specific situation when making a stock or crypto contribution. With Daffy, you can make the most of your charitable donations while also benefiting from potential tax savings.

Please note that the information contained on this page is for educational purposes only and should not be considered tax advice. Any calculations are intended to be illustrative and do not reflect all of the potential complexities of individual tax returns. To assess your specific tax situation, please consult with a tax professional.

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