There has been an influx of new, cheaper entrants in recent years, but it remains to be seen whether they will gain the same level of popularity and staying power as the more established coins. Bass has seen clients gift large amounts of crypto to help pay their parents’ mortgages or help them retire. Peer-to-peer transfer apps PayPal and Cash App also let you buy and send cryptocurrencies. With PayPal, you can send Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC) and Bitcoin Cash (BCH) to another PayPal user. Our partners cannot pay us to guarantee favorable reviews of their products or services. We believe everyone should be able to make financial decisions with confidence.
- However, these descriptions are not complete, the accuracy of these statements cannot be guaranteed to be correct and the information subject to change, so you should not rely upon them.
- A free paper wallet generator, available on platforms such as BitAddress.org and WalletGenerator.net, can help you generate a printable document with a unique public and private key combination.
- The investing information provided on this page is for educational purposes only.
- We believe everyone should be able to make financial decisions with confidence.
Do some homework on the coins that entice you most, then weigh their prospects and determine if that is reflected in the price. As this is a gift, it would also be wise to consider what the recipient might want. Cryptocurrency gifts are taxed similarly to other monetary gifts and work most similarly to gifting a stock or bond. However, there’s no gift tax for giving or receiving crypto under a certain amount. To gift a hardware wallet, you’ll need to purchase a device from a hardware wallet company; some are available at stores like Best Buy and Walmart. Once it arrives, you’ll need to follow the included instructions to set it up and download the accompanying software.
Create a software wallet
A free paper wallet generator, available on platforms such as BitAddress.org and WalletGenerator.net, can help you generate a printable document with a unique public and private key combination. The document will have QR codes that link to these addresses for easy transfer. If your crypto exchange has a mobile app, you can scan that QR code, then follow the steps on the app to send an amount of your choice to the paper wallet address. You’ll have to go through a few extra identity verification steps on the app and have a linked payment method to send crypto this way. You can also use these two apps to send crypto to an external crypto wallet if your recipient already has one. Fees vary but are generally higher than crypto exchange or wallet transfers.
Once funds have been added to the wallet, you can wrap it and gift it, along with the seed phrase information. To elevate the gift, some wallet companies have steel cards available for purchase that can be engraved with a seed phrase. This method may take a little more effort, as you’ll have to install software to create a wallet to transfer. To give a software wallet, first download a mobile or desktop wallet, such as one of these top wallet options, and follow the steps to set up an account. The investing information provided on this page is for educational purposes only. NerdWallet, Inc. does not offer advisory or brokerage services, nor does it recommend or advise investors to buy or sell particular stocks, securities or other investments.
With some of the apps, you’re giving cash that gets converted into crypto when the person accepts the gift. Rather than using a third party to manage the transfer, you may be able to send crypto directly to someone’s existing crypto wallet. To do so, you’ll need to know their address and make sure the tokens you’re sending are part of the same blockchain. Since each individual’s situation is unique, a qualified professional should always be consulted before making any financial decisions. Investopedia makes no representations or warranties as to the accuracy or timeliness of the information contained herein. Make sure that you record how much you paid for the gift and how much it was worth when you transferred it.
If the person redeeming a crypto gift card has already got a digital wallet, the coins you’ve bought for them can be directly deposited into that existing holding account. If they haven’t got a digital wallet, they’ll need to set a new one up. Find one that looks trustworthy, preferably with good reviews, and offers what you want, then select the amount you wish to gift and pay for it. Once the seed phrase is ready, you can send your desired amount of crypto to the wallet address you created.
However, you can create one by visiting a website that randomly generates keys and corresponding QR (quick response) codes. This results in a piece of paper containing the printed information you need to access your cryptocurrencies and facilitate transactions. Once the payment is made, you’ll be sent a gift card worth the amount you deposited.
Can You Give Crypto as a Gift?
Often, sending cryptocurrencies is as simple as logging into the account where you hold them and sending the amount of your choice to the recipient’s wallet address. The cheapest method to store cryptocurrencies offline is via paper wallet. A paper wallet can be nothing more than a piece of paper that you write your key codes on.
So, if you’re just sending $50 in bitcoin to your cousin, you shouldn’t have to worry about the tax implications. The IRS has helpful pages on gift taxes and virtual currencies to help you navigate the details. And when it comes to reporting your transactions in April, taxes usually kick in only when you sell or trade. Cash App is a popular money transfer service owned by Block, formally known as Square, and its app makes it quick and easy to gift bitcoin to other people. This guide explains what crypto is, how to gift crypto, how crypto gifts are taxed, and alternatives to gifting cryptocurrencies.
Many software wallets have features that let you purchase crypto directly from the wallet or send it from another wallet or exchange. Paper wallets can be gifted with a card for a special occasion and are a more tangible form of digital currency. Once received, the funds can be transferred to a software or hardware wallet by scanning the same QR code, or the paper can be stored safely. In this year alone, the price of a single bitcoin has fluctuated wildly — from a low of about $30,000 to an all-time high of more than $65,000 in November. Plenty of people have made money through cryptocurrency speculation, but it’s just as easy to lose money. It’s also worth noting that cryptocurrency is a common tool in online scams and that cryptocurrency transactions — once completed — are generally final and irreversible.
At the moment, Cash App doesn’t support any other assets, which makes the platform somewhat restrictive for cryptocurrency enthusiasts. But if the recipient is new to digital currency, then bitcoin is likely the asset they might know. Coinbase allows you to cancel the transaction any time right up until the recipient creates an account and claims the gifted cryptocurrency. However, the transaction is automatically canceled if the person doesn’t create an account within 30 days.
How to Send Bitcoin to Someone?
“Make sure it’s understood that it’s a gift, not a loan or a payment for services.” The most critical step is copying down the seed or recovery phrase the wallet generates. This will look like a set of 12 or 24 random words, which are essential to recover your wallet funds or transfer them to someone else. The seed phrase must be gifted with the rest of the wallet information.
- Once you’ve set up your own account with a crypto exchange, you’ll need to link a traditional payment method.
- Similar to giving a gift card for a retail store, giving crypto can be a fun way to recognize and honor someone’s interests or share your interests with others.
- Do some homework on the coins that entice you most, then weigh their prospects and determine if that is reflected in the price.
- Thanks to their soaring popularity and partly because of their speculative nature, cryptocurrencies are now much easier to buy.
This page contains general information and does not contain financial advice. Any hypothetical performance shown is for illustrative purposes only. Actual investment performance may be different for many reasons, including, but not limited to, market fluctuations, time horizon, taxes, and fees. Please consult a qualified financial advisor and/or tax professional for investment guidance. Just tread carefully because some gifting methods are more legitimate than others.
These readily available USB drive devices are small, waterproof, virus-proof, and widely regarded as the safest way to store cryptocurrencies. The size of the gain is determined by how much was paid by you, the donor. In other words, if a coin were bought for $100 and sold five years later for $500, then the gift recipient might be taxed on the profits if they met the other capital gains requirements. They are small, waterproof, virus-proof, and regarded by many in the industry as the best place to ensure that your private keys are safe and secure. Cryptocurrencies are high-risk investments, and it is crucial to review your options before buying.
NerdWallet does not and cannot guarantee the accuracy or applicability of any information in regard to your individual circumstances. Examples are hypothetical, and we encourage you to seek personalized advice from qualified professionals regarding specific investment issues. Our estimates are based on past market performance, and past performance is not a guarantee of future performance.
Then, you can purchase cryptocurrency like Bitcoin or Ethereum through that account using traditional currency like US dollars. By “volatile,” we mean that the value of cryptos can vary dramatically from one day to the next. That’s why many experts recommend you invest in some crypto but spread the rest of your asset mix across more traditional and less risky assets.
It’s important to note that the size of a donee’s capital gain is determined by how much you originally paid for that asset as the donor. After the transfer goes through, the transaction will be recorded on the ledger, and the coins should appear in the donee’s account. After giving the gift card to your friend or loved one, they’d need to redeem it by logging into the same site or exchange and entering the unique details that were added to the gift card.
If the gift is under a certain amount — $16,000 in 2022 and $17,000 in 2023 — it’s also tax-free. Many or all of the products featured here are from our partners who compensate us. This influences which products we write about and where and how the product appears on a page.
Hardware Crypto Wallets
As a result, investors can buy, sell, or trade cryptocurrencies without having to worry about fluctuations in traditional currency markets. If you give more than $16,000 in 2022, you’ll need to report the excess amount on your tax return, and it will count against your lifetime basic exclusion. However, the lifetime exclusion amount is about $12 million as of 2022, and you still won’t pay gift taxes unless you use all of it.
If you’re gifting crypto with an app, the recipient will have to set up an account on the platform and may need to verify their identity before they can claim the gift. If all that sounds like gibberish, you may want to stick with using one of the apps. Creating and managing crypto wallets doesn’t require a lot of technical expertise. But there’s less room for error, and losing the info or sending the crypto to the wrong address could mean it’s lost forever. You may be able to easily send Bitcoin, and several platforms support other altcoins. But gifting a brand-new or lesser-known altcoin might require you to be more familiar with the crypto space and have a crypto wallet first.
Best Crypto Exchanges and Apps
While gifts can be taxable, taxpayers are subject to an annual gift tax exclusion and a lifetime basic exclusion amount. Both exclusions are adjusted for inflation, and they’re high enough that most people don’t pay taxes for sending gifts. Asking these details could ruin the surprise, so an alternative could be to create a new software wallet or buy them a hardware wallet. You can then load the cryptos directly onto the wallet and give the recipient the recovery phrase.
This method might be a little bit more expensive, but it could be ideal if you know that your loved one is interested in crypto investing. Hardware wallets will help keep their digital assets safe and secure, thanks to how they are a form of cold storage that’s disconnected from the internet. Some devices support dozens of cryptocurrencies, and they can even come with small displays where you can check up on the current balance. Using one of these wallets can require a little bit of technical knowhow, so it’s always best to give them a little bit of training when they open their gift. Once you’ve set up your own account with a crypto exchange, you’ll need to link a traditional payment method.
How Are Crypto Gifts Taxed?
When you’re up and running, purchased digital currencies can easily be sent to the giftee’s wallet address. While Coinbase does not have an official gift card, it has partnered with London-based startup WeGift to allow users to buy virtual gift cards using cryptocurrency. Users can go to the WeGift site and authorize the app to access their Coinbase account. While these gift cards do not contain cryptocurrencies, it can be used at over 120 retailers, making it a perfect gift when you are not sure what to get.
Please consider, among other important factors, your investment objectives, risk tolerance and EarlyBird’s pricing before investing. Diversification and asset allocation do not guarantee a profit, nor do they eliminate the risk of loss of principal. The IRS currently taxes crypto profits reported within a year of receiving the asset as a short-term capital gain. This is taxed as ordinary income — so the profit you made on the sale will be taxed at your normal income tax rate.