Why donating AID is better than FIAT for both Charities and Donors?
We are all used to donating in our local fiat currencies mostly because it’s not yet in our mindset that a charity would accept crypto. With the advent of AidCoin, however, things are changing: having AIDChain, a user-friendly platform with a built-in wallet for raising and storing crypto donations enables charities to easily accept crypto. What’s more important — a single, rather stable cryptocurrency, AID, mitigates the risks of loosing donations’ value due to unexpected price fluctuations, unlike other crypto that is chiefly used for speculation purposes.
And in this new era of giving you, both as a donor and a cryptocurrency holder, can reap tangible benefits when donating your crypto instead of fiat. Here is why:
1. You can save on your capital gains taxes.
This aspect, as well as the following ones*, depends on the legal status of crypto in your legislation. If we consider the U.S. law, cryptocurrency is viewed as an investment property there, thus you owe taxes when you sell, trade, or use it. That’s why donating crypto is a tax efficient way to give: you can benefit by not paying taxes you’d have to pay otherwise.
For instance, if the amount of AID you’re going to donate is now worth $10,000 compared to the $7,000 when you bought it, donating it to charity in form of crypto will enable you to save on paying the 23,8% capital gains tax for the spread of $3,000, which amounts to $714. Of course, this also refers to other crypto: donating your BTC through AIDPay is far more efficient than converting it to fiat and then donating it.
2. You can have a higher tax deduction than if you only donate the after-tax proceeds of your sale of the crypto.
Many jurisdictions allow reduction of taxable income for certain categories of expenses. In the context of the U.S. law, these categories are referred to as “itemized deductions” for individuals, and gifts of money or property to qualifying charitable organizations fall within them. So since crypto is considered property in the U.S., when you donate crypto in kind, you can have a charitable deduction in the amount of its fair market value.
Following our previous example, if you donate $10,000 worth of AID, you can get a full $10,000 charitable contribution deduction. On the other hand, if you convert it to fiat, you’d only have $9,286 left to donate after the capital gains tax and thus will receive an equal, $9,286, tax deduction.
Great news is that AidCoin donors can get a receipt eligible for tax deduction. There is just one necessary condition: even though you can donate anonymously through AIDChain and AIDPay, you still need to prove that you are the one who sent the donation. That’s why we will offer our users to go through a quick KYC procedure on our website and then provide a donation receipt with all the necessary fields filled automatically (e.g. charity’s registration number, the donated amount denominated in a chosen fiat currency, your name etc.). Then you will simply have to send this receipt to the local authority in charge of qualifying tax deductions, such as the IRS in the U.S., attaching any additional forms required by the local authority.
3. Your crypto donation value for the charity will be much higher than if donated in fiat.
In most countries and particularly the U.S., charities are exempt from paying capital gains on the sale of assets. That’s why if you donate crypto the full value of your gift stays intact, as opposed to selling your crypto and donating the after-tax proceeds. In our example, if you donate AID as it is, the charity would receive the original $10,000 worth of AID instead of $9,286 in fiat.
Moreover, since we incentivize our charities to stay crypto as long as possible, by donating AID you will also contribute to enhancing cryptocurrency adoption worldwide, which is a win-win for everyone!
*Of course, everything stated above depends on the particular country’s legislation and we can’t cover all possible scenarios in one post (more info can be found on Forbes and other links embedded in the text). And yet, we hope this brief overview will make donors think twice before donating fiat instead of using AID or other crypto for this purpose.
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