There are pros and cons to everything, including cryptocurrency. On one hand, it is an interesting, and often profitable, investment. On the other hand, it is still taxable.
People are often surprised by this.
The good news is that there are some methods, other than giving up your US citizenship, that can mitigate the amount of tax you pay for your bitcoin or cryptocurrency of choice.
Think Longterm Investment
People are attracted to cryptocurrency for all kinds of reasons, pure curiosity, tech fans, investment, the list goes on. Whatever your reason is, try and think in the longterm. Here is why.
The IRS (Internal Revenue Service) think of cryptocurrency as property, not as an equivalent currency to dollars. This means that if you sell your bitcoin for example and make a profit then that is considered to be capital gains, which are taxable. All is not lost though. Luckily, the government is encouraging of longterm investments. Therefore, if you hold on to your coins for more than 12 months you will pay a lower rate of tax than if you were to cash in and cash out quickly.
It is unlikely that you are of an age where retirement is on your mind, but this might make you think differently. You can defer tax by using your retirement account. “This is a bit of a coup for crypto fans,” says, Andy Breen a crypto blogger at Write My X and 1Day2Write, “With this simple adjustment to how they trade they can maximize gains with minimal tax.”
Using a trusted agent or platform from the alternative investment IRA industry, you can grow your investment with no tax gains. Why? Because any gains made within your retirement account, or any income, are not taxable.
Plan How You Will Use It
Maybe you have invested for investment’s sake and have no plans to actually use any of the cryptocurrencies you have been slowly squirreling away until the day you decide to retire early. For the sake of lower tax, you might consider using some of it at least.
… Continue Reading at: cryptodaily.co.uk [source]