Crypto taxes are a high priority for the IRS this year. Currently, authorities treat token holdings like property subject to capital gains and losses, similar to real estate, bonds, and stocks. With that in mind, let’s examine a few crypto-related tax tips.
If you want to develop a tailored tax plan — which leverages compliant offshore opportunities, domestic “sheltering” programs, and other deductions and credits — get in touch today. Let’s talk.
Cryptocurrency Tax Tips: Keep Records
The key to ideal crypto tax positioning is meticulous record keeping. Even though authorities have eliminated many deductions, dozens remain and will likely prove beneficial to token investors. But to take advantage of every credit, deduction, and sheltering option, you must have an accurate accounting of gains and losses.
If your record keeping skills need work, don’t worry. For starters, you can export transaction lists from exchanges. Additionally, a cryptocurrency consultant can square your situation.
Another thing to remember is that cryptocurrency received as payment or through mining is calculated differently than tokens gained and lost through trading. As such, it’s important to keep track of these sources separately.
Cryptocurrency Tax Tips: Take Advantage of Sheltering Opportunities
You hear the phrase “tax shelter” and automatically think “illegal.” But that’s not the case. To stimulate the economy, over the years, legislators have implemented several compliant “tax shelter” opportunities. The latest to hit the block is the Opportunity Zone Program. An excellent fit for many crypto investors, it allows people to inject capital gains into designated startups in exchange for significant tax breaks.
Cryptocurrency Tax Tips: Report Crypto Losses to Save
Don’t forget to report your crypto losses! Too often, token holders fail to reduce their income calculations by claiming crypto losses. If you sold tokens for less than you purchased them, use the difference to offset gains. In some cases, you can carry the losses over.
Connect with A Cryptocurrency Tax Accountant
Our team of crypto lawyers and accountants has been involved in the industry for years. Our managing attorney, Andrew Gordon, is a regular on the crypto speaker circuit and has helped countless individuals and companies align their tokens holdings for maximum profit.