How to avoid paying taxes on Crypto
The IRS (Internal Revenue Service) wants you to pay tax on all types of cryptocurrency activities.
Cryptocurrency is no longer decentralized. The government of the United States has access to all types of income-related activities you do in the domain of cryptocurrency.
Do not think you will be able to avoid or minimize tax payments on your income in crypto because of the decentralized nature of this fintech innovation.
You will need a strategic approach to achieve this incredible feat.
You had better use that wise head installed between your shoulders to be on the safe side.
Why is your income from cryptocurrency taxed?
How do cryptocurrency taxes work and affect your income?
Millions of cryptocurrency enthusiasts throughout the nation want to minimize their tax liabilities on crypto income.
Get the hang of the way cryptocurrency is taxed.
Get the hang of the way cryptocurrency taxes work and impact your income.
You will then get the full bang of time and money you have spent on earning from this financial innovation.
The IRS says cryptocurrency is like a property similar to real estate and equities.
The government of the United States wants to protect the financial and business interests of its nationals. This is the reason your income from cryptocurrency is taxed.
You are obliged to pay two types of taxes on your crypto income.
Capital Gains:
Those who dispose of their cryptocurrency are obliged to pay capital gains tax.
What does it mean?
- Do you sell your crypto balance for FIAT?
- Do you trade one crypto for another?
- Do you buy goods or services using cryptocurrencies?
You are obliged to pay capital gains tax if you are involved in these crypto activities.
The amount of tax is subject to the percentage of appreciation in the value of your cryptocurrency since you received it.
You will pay short-term capital gains tax if you dispose of your crypto balance in less than one year. Those who HODL their crypto investment for more than one year are obliged to pay long-term capital gains tax.
The rate of CGT you owe will depend on the amount of income you will generate through this virtual decentralized financial revolution based on technology advancements.
Ordinary Income Tax:
Those who earn in the form of cryptocurrency are obliged to pay ordinary income tax.
What creates crypto earning events?
The list includes but is not limited to the following only:
- Earning crypto through staking.
- Earning crypto via mining rewards.
- Earning referral bonus through cryptocurrency apps.
- Earning compensation for your work in the form of cryptocurrency.
How do you earn crypto from crypto? Make your choice from the list above and be ready to pay ordinary income tax for your involvement in cryptocurrency-related activities.
Does the IRS track your cryptocurrency investments?
The truth is always bitter. We love to tell you the truth.
The IRS tracks all your cryptocurrency-related activities.
Do you want to know the process? Take a look below:
- The IRS has made it compulsory for every crypto exchange in the United States to complete KYC checks on all customers.
- Exchanges are under compulsion to process the banking information where they receive FIAT currency in exchange for giving crypto to customers.
- Exchanges maintain data related to the addresses you have withdrawn cryptocurrency to. The IRS can identify all custodian wallets.
- Crypto exchanges send 1099 to the IRS and all customers.
- The IRS has won lawsuits against popular cryptocurrency exchanges like Coinbase Kraken and Poloniex. As a result, all cryptocurrency exchanges share their customers’ data with the IRS.
This is how IRS tracks everyone’s cryptocurrency investments and relevant data.
Do you want to minimize or avoid tax payment crypto?
Many crypto enthusiasts throughout the United States want to avoid or minimize tax on their cryptocurrency earnings.
We suggest you follow the steps mentioned below to add this feather to your financial investment cap:
- Invest and HODL for the long term.
- Withdraw profit during a low financial year.
- Gift or donate crypto.
- Invest in cryptocurrency through your Individual Retirement Account (IRA) or 401-K.
- Hire a certified public accountant familiar with cryptocurrency.
- Apply for cryptocurrency loans.
- Migrate to cryptocurrency tax heavens.
- You should declare your entire cryptocurrency income under all circumstances.
- Determine your crypto gains and crypto losses.
- Try to offset your cryptocurrency gains with losses.
- In your will, leave crypto to your contacts.
- Buy crypto as a part of your life insurance policy.
- Learn to report on your crypto income on time.
- Learn to file taxes on your crypto income on time.
- Learn to cash out your crypto without tax payment.
- Try to leverage the potential of a crypto tax calculator or dedicated software.
- Learn about crypto capital gains tax and rates.
- Learn the art of calculating crypto capital tax rates.
Do you want to know more about it?
You are at the right place at the right time.
Message or phone our team once, and we will then see how we can help you.
