Crypto Gift Tax: What You Owe When Giving Crypto as a Gift

When you give crypto, a digital asset like Bitcoin or Ethereum that can be sent, stored, or traded. Also known as cryptocurrency, it as a gift, you might think it’s just a nice gesture—no money changes hands, so no taxes. But the IRS, the U.S. tax authority that treats cryptocurrency as property, not currency sees it differently. Giving crypto isn’t tax-free just because you didn’t get paid. The capital gains, the profit you make when you sell or trade an asset for more than you paid for it you locked in when you bought that Bitcoin or ETH still matter—even if you’re giving it away.

If you bought 1 BTC for $30,000 and now it’s worth $60,000, and you gift it to your kid, you owe taxes on the $30,000 gain. The IRS doesn’t care if you didn’t cash out—you still triggered a taxable event by transferring ownership. The person receiving the gift doesn’t pay tax right away, but they inherit your original cost basis. So if they sell it later for $70,000, they’ll owe tax on the $40,000 gain ($70k - $30k). That’s the rule. No exceptions. And if you gift more than $18,000 in crypto value to one person in a year (2024 limit), you have to file a gift tax return (Form 709). That doesn’t mean you pay gift tax yet—it just means the IRS knows you moved big value. Most people never pay gift tax unless they’ve given away over $13 million total in their lifetime. But if you skip the form, the IRS can come after you later with penalties.

People often mix up crypto gifts with airdrops, token swaps, or exchange transfers. Airdrops? Those are usually taxable as income when you receive them. Swapping ETH for SOL? That’s a taxable sale. But giving your old wallet’s ETH to your sibling? That’s a gift—and it still triggers capital gains. You need to track every purchase date, price, and wallet address. Spreadsheets don’t cut it anymore. Use a crypto tax tool like Koinly or CoinTracker. They auto-link your wallets, calculate your gains, and flag gift transactions. If you’re giving crypto to a charity, you might get a deduction—but only if you itemize and the charity is IRS-approved. And if you’re gifting to someone outside the U.S.? That’s a whole other layer of complexity. The IRS doesn’t care where they live—you still owe tax on the gain.

There’s no gray area here. The IRS has been auditing crypto gifting since 2022. They’re cross-referencing blockchain data with tax returns. If you gave away $50,000 in crypto and didn’t report it, you’re asking for trouble. Don’t wait until April to figure this out. Keep records now. Know your cost basis. Understand the $18,000 annual exclusion. And if you’re unsure, talk to a crypto-savvy tax pro—not your cousin who trades on Binance. This isn’t about avoiding taxes. It’s about doing them right so you don’t get hit with a bill you didn’t see coming.

Below, you’ll find real-world examples, common mistakes, and how to handle crypto gifts without getting blindsided by the IRS. No fluff. Just what you need to know.