10 Ways to Save Money on Your Crypto Taxes
If you have invested in crypto currency you may not realize that you will have to pay taxes on that currency. The IRS will be taxing crypto currency and you need to be aware of what you can do to limit the amount of taxes they will be receiving. Here are ten ways to save money on your crypto taxes.
1. Keep records
The IRS will ask you about your records. Keep detailed and descriptive records for every transaction you do with your crypto currency. They will want to know how much, when and how you traded or invested and much more. The more accurate your records, the easier it will be to figure out your correct taxes.
2. Convert back to currency
Make sure your records reflect any trades. You will need to convert back to your home currency to figure out your capital gains. You will want to be sure to keep accurate records so you are not overtaxed on your trades.
3. Token Tax
This is an algorithm you can use to determine how to save the most money on your crypto currency. It will calculate what currencies you have and will tell you when to buy and sell to make the most of your tax savings.
4. Virtual currency
Be aware that virtual currency is treated like property. This concept can be confusing and if you have made a few trades last year you will want to be sure you understand where your currency falls.
5. Accountant
It may be a good idea to hire an accountant who understands the ins and outs of crypto taxes. You will want someone who is well versed in crypto tax and who is up to date on all the latest changes to the tax laws. You can compare prices for tax services on PriceListo.
6. All crypto currency is taxable
No matter how you obtained your crypto currency it is taxable. Whether you use foreign or domestic locations to buy and sell your crypto currency you are responsible for paying the taxes.
7. Capital losses
If you have had capital losses you may be able to use these against your capital gains. This could result in offsetting your tax liability. You need to check that as soon as possible to be sure you are able to use your losses in this manner.
8. Invest in the long run
You should invest in crypto currencies for over a year. Your taxes will be higher if you trade on and off during the year. If you keep your investment in one place for more than one year your capital gains taxes will be lower than if you keep trading during the year.
9. Gift your crypto currency
You give your crypto currency as a gift if you have not sold the crypto currency. There are limits to how much you can give, so be sure to do your research to determine the caps on gift giving. You will not have to pay taxes on gifts that are below are certain amount.
10. Put money aside
When you sell your crypto currency be aware that you should put dollars aside, as opposed to investing in another crypto currency. Depending on your tax bracket and how long you owned the currency you could save taxes. If you reinvest in crypto currency you will end up paying more taxes than you should on your initial investment.
Investing in crypto currencies can be a unique and fun experience; however you need to be aware of your tax obligation. Hire a good accountant and make sure to invest wisely for the long run and you should have no problem when tax time comes around.
