When you contribute assets like cryptocurrencies to Daffy, you will need to file an IRS 8283 Form with your federal income tax return if the value of your contribution exceeds $500. If your crypto contributions in any calendar year exceed $5,000, the IRS requires you to obtain a qualified appraisal.
The tax benefits of contributing to Daffy can be significant, especially if you have held your crypto for more than a year. In this case, the IRS considers the donation value to be the fair market value of the asset at the time of donation, not the value you paid for it. If you itemize your tax deductions, this amount can be substantial.
For example, if you purchased Bitcoin for $10,000 and then donated it to Daffy when it was worth $60,000, you could potentially deduct the full $60,000 from your income. This could save you thousands of dollars in taxes, while also supporting the causes you care about.
In conclusion, Daffy is a great option for a DAF, especially for those who hold cryptocurrencies and other forms of property. Not only does Daffy provide a simple and efficient way to give, but it also offers significant tax benefits. As always, it is best to consult your tax specialist to understand your specific situation.