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What are the IRS' rules and regulations for making a donation?


The IRS has specific rules and regulations for making a donation, especially when it comes to non-cash charitable contributions. If the amount of your deduction for all non-cash gifts is more than $500, you are required to file an IRS Form 8283. This form is used to report information about your donations and is a standard form in most popular tax filing software. Charitable deductions are one of the most generous income tax deduction strategies. You can deduct up to 30-60% of your Adjusted Gross Income (AGI) through charitable donations. If you want to yield even higher tax savings, consider donating appreciated assets, like stock, ETFs, and crypto instead of cash. This way, you’ll avoid paying capital gains taxes on the asset. However, the majority of non-profits don’t have the capability to receive stock, ETFs, index funds, and cryptocurrencies. That’s where donor-advised funds like Daffy come in. Daffy is a great option for a Donor-Advised Fund (DAF) as it allows you to donate cash, stock, or crypto, then earmark the money for your favorite causes and charitable contributions. If your crypto contribution was valued at over $5,000 and your situation requires a Donee signature, Daffy can assist you with this process. Remember, the IRS has different rules for assets that have been held short-term vs. long-term. If you have held an investment for less than a year, then the IRS limits your deduction to the fair market value of the asset minus the capital gain. In this case, it usually makes sense to just sell the asset and donate the after-tax proceeds rather than donating the asset itself. Join Daffy to make giving a habit and enjoy the benefits of regular charitable contributions.

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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