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. But with the advent of AidCoin things are changing: any charity can easily accept all major cryptos through AIDChain — a user-friendly platform with a built-in wallet and full instructions for raising and storing crypto donations.
In this new era of giving, you, as a donor and a cryptocurrency holder, can reap tangible benefits when donating your crypto instead of fiat, and here’s 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 to date, cryptocurrencies are viewed as an investment property, thus you owe taxes when you sell, trade, or use them. This makes donating crypto a tax-efficient way to give: you can benefit by not paying taxes you’d have to pay otherwise.
Example:
✅ Say, you hold $10,000 worth of BTC which you bought for $7,000 some time ago. If you donate it to charity in form of crypto, you won’t have to pay the 23,8% capital gains tax for the spread of $3,000 and lose your $714.
In this regard, donating any of the 23 cryptos accepted by AIDPay will be much more efficient than converting this money to fiat (or to other cryptos!) and donating it afterwards.
2) If you donate crypto, you’ll have a bigger tax deduction.
Different jurisdictions allow a reduction of taxable income for certain categories of expenses. In the U.S. law, these categories are referred to as “itemized deductions” and include gifts of money or property — e.g. crypto — to qualifying charitable organizations — e.g. charities on AIDChain. This means that when you donate crypto in kind, you can have a charitable deduction from your taxes in the amount of its fair market value.
Example:
✅ Following our previous example, if you donate $10,000 worth of BTC, you can get a full $10,000 charitable contribution deduction from your fiat taxes and the charity will gain the full sum of $10,000 in BTC. Win-Win!
❌ On the other hand, if you convert your BTC to fiat and then make a donation, you’ll first have to pay the 23% capital gains tax on the spread ($714) and then donate rest of $9,286 to charity. The tax deduction you’ll receive in this case will be only $9,286, the impact of your donation will be smaller, and plus you’ll also spend quite a while of your precious time for exchanging crypto and managing taxes. As a result — everybody loses.
The great news is that when you make a donation through AIDChain or AIDPay, you can get a receipt eligible for tax deduction. There is just one necessary condition: you 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 registration 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 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 in your country, and get your deduction!
3) Your crypto donation value for the charity will be much higher than if you converted 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 your crypto as is, the charity will receive its full market value, unlike as if you converted it to fiat on your own and donated the after-tax proceeds.
Example:
✅ If you donate your BTC through AIDPay, the charity would receive the original $10,000 worth of AID instead of the $9,286 you would have left after paying your taxes.
4) Crypto donations are traceable, fiat ones are not.
Last but not least: we incentivize our charities to spend all their donations in crypto so our donors can trace all their transactions through AIDChain. This means that by donating crypto through AIDChain/AIDPay you will not only increase the value of donations, you will also contribute to enhancing cryptocurrency adoption worldwide and be sure your donation reaches its goal!
*Everything stated above depends on the particular country’s legislation and we can’t cover all possible scenarios in one post (more info about taxation can be found on Forbes and other links embedded in the text). Yet we hope this brief overview will make donors think twice before donating fiat instead of using crypto for this purpose.
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