Key points to remember:
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Bitcoin gifts are not immediately taxable. The IRS treats cryptocurrency as property, so recipients generally do not owe income tax on the gift.
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Stay within the 2025 exclusion limit. You can give up to $19,000 per person, or $38,000 for spouses sharing gifts, without triggering Form 709.
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Recipients inherit the donor’s cost basis. Future taxes depend on the donor’s initial purchase price and not the value of the cryptocurrency at the time of donation.
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Keep detailed records to avoid IRS problems. Document the fair market value, transaction date and wallet details to make your gift audit-proof.
Bitcoin has become a popular gift for birthdays, holidays or simply to share enthusiasm for cryptocurrencies. Under US tax law, gifting Bitcoin (BTC) is not an immediate taxable event. The recipient owes no income tax, and the donor generally owes no gift tax if the value of the gift is within the annual exclusion limit.
The Internal Revenue Service (IRS) treats digital assets as property, not currency. This means that Bitcoin gifts fall under the same umbrella as stocks or real estate. They follow property rules, require an appraisal at the time of transfer, and may need to be reported on Form 709 if the annual exclusion limit is exceeded.
In short, you can gift Bitcoin without creating an immediate tax liability. However, poor documentation or misunderstanding of the basic rules can still cause problems later.
What counts as a gift?
A gift of cryptocurrency must constitute a true transfer of ownership. You give up control and receive nothing in return. The 2025 annual exclusion allows up to $19,000 per beneficiary, or $38,000 for spouses using gift splitting, without filing Form 709. Exceeding this threshold does not automatically create a tax liability, but the form must still be filed.
Gifts between U.S. citizen spouses are unlimited. For non-citizen spouses, the limit for 2025 is approximately $190,000. Transfers to non-residents or certain trusts may be subject to additional requirements.
Not all transfers are considered a gift under IRS rules: only those made out of genuine generosity without expectation of repayment or services.
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Direct payment of an individual’s tuition or medical expenses is exempt from gift tax.
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Moving cryptocurrencies between your own wallets does not count as a gift.
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Transfers classified as “gifts” that are actually payments for services are treated as income and not generosity.
When Form 709 comes into effect
Form 709, the U.S. Gift (and Generation Transfer) Income Tax Return, allows the IRS to track gifts that exceed the annual exclusion limit. Most people never owe gift tax, but some transfers still require reporting.
You must file Form 709 if:
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Your gifts to a single person exceed $19,000 in 2025, the annual exclusion amount.
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You are making a future interest gift in which the recipient cannot immediately use or benefit from the asset.
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You and your spouse choose to split the gifts to double the exclusion, which requires both spouses to file Form 709.
You do not need to file if:
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All gifts remain within the annual exclusion and are considered transfers of current interests.
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Gifts to a U.S. citizen spouse or qualified charity are completely excluded from filing as long as you transfer full ownership and control.
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All donations go to qualified charities to which you transfer full ownership.
Did you know? Form 709 must be due by April 15 of the year following the donation. A separate form must be filed for each year, and filing does not necessarily mean tax is due. The $13.99 million lifetime exemption for 2025 generally covers most reportable gifts.
In practice, if you keep cryptocurrency gifts under the annual limit and document the fair market value as of the date of transfer, you will likely avoid filing a return altogether.
The basis and trap of “double basis” for recipients
Receiving Bitcoin as a gift is not immediately taxable, but your future capital gains tax depends on the basis and holding period you inherit from the donor.
Carryover basis
You generally inherit the donor’s initial cost base and holding period. If they bought Bitcoin for $5,000 and offered it when it was worth $20,000, your basis would be $5,000. When you later sell, you will have to pay capital gains tax on the difference between your sale price and this basis.
Double basis rule
If the market value of the gift is less than the donor’s basis at the time of transfer, two different bases apply:
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For winnings, use the donor’s original base.
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For losses, use the fair market value (FMV) at the time of the gift.
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If you sell between these two values, no gain or loss is recorded.
Early adopters of Bitcoin often have very low cost bases, so recipients of appreciated coins may face significant future tax obligations. Conversely, Bitcoin donations worth less than the donor’s basis limit deductions for potential losses. If the donor pays gift tax, part of that payment may increase the recipient’s basis.
Obtain the donor’s purchase date, cost basis, fair market value as of the gift date, and whether gift taxes were paid prior to the sale. These details determine whether your next sale of Bitcoin will result in a taxable gain, a deductible loss, or no gain or loss.
Cryptography-specific pitfalls to avoid
Most cryptocurrency gifts follow standard ownership rules, but digital assets introduce additional risks that can trigger audits or disqualify deductions.
1. Turn a gift into a sale
If you sell or exchange cryptocurrency before transferring it, the transaction counts as a taxable disposition and not a gift. To qualify as a true gift, you must transfer the asset directly, receive nothing in return, and permanently relinquish control.
2. Bad assessment or missing records
Always document the fair market value (FMV) on the date of transfer, along with your original cost basis, purchase date, and transaction identifiers. Without proper records, the IRS may challenge the declared value or the recipient’s subsequent calculation of gain or loss.
3. Gifts that actually constitute income
If cryptocurrency is given in exchange for services to an employee, entrepreneur or influencer, it counts as compensation and not a gift. This makes it taxable income for the recipient and may subject the sender to payroll or self-employment taxes.
4. Cross-border and non-citizen issues
International gifts or transfers involving foreign wallets may require filing of Form 3520 and other disclosures. Gifts to non-U.S. citizen spouses are capped at approximately $190,000 in 2025, in contrast to the unlimited exclusion for U.S. citizen spouses.
Forget any of these rules, and a generous gesture could quickly become a taxable event.
Simple steps to avoid tax problems
Gifting or giving away cryptocurrency in 2025 can be simple if you follow a few key steps:
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Stay within limits: Keep each recipient’s gift total to $19,000 or less ($38,000 if sharing with a spouse). If you exceed this amount, file Form 709. You probably still won’t owe any taxes unless you exceed the lifetime exemption.
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Know what you are transmitting: The recipient inherits your cost basis and holding period. Their future tax bill depends on your original purchase price, not the value on the date of the gift.
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Record everything: Keep records of the transfer date, fair market value, your original cost basis and acquisition date, and the wallet or transaction ID. Proper documentation protects both parties if the IRS requests an audit.
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Gift, do not sell: Selling or exchanging cryptocurrency before making a donation makes the transfer a taxable disposition. Instead, transfer the asset directly.
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For charity: Donations over $5,000 require a qualified review, not just a screenshot of the exchange. Confirm that the charity can accept cryptocurrency before sending.
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Look at cross-border gifts: Foreign beneficiaries and non-citizen spouses face lower exclusions and additional reporting requirements.
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Seek advice from a professional for large or complex transfers: High-value gifts, multi-signature wallets and trusts can create unique compliance challenges.
Before offering Bitcoin
Most Bitcoin gifts fit safely within IRS limits and no immediate taxes are due. The risk usually arises later, when the recipient sells. Because the donor’s basis is carried forward, gains or losses depend on this original value and not the market price at the time of the gift.
Managed correctly, gifting Bitcoin is a simple way to share cryptocurrency wealth without tax complications. Keep detailed records, meet thresholds, and confirm that the transfer qualifies as a genuine gift. Generosity shouldn’t come with a surprise tax bill, and if we take the right steps, that won’t happen.
