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Here Are 6 New Crypto Tax Rules That Might Affect What You Owe
The new tax code includes some ways that crypto investors might be able to reduce the amount of taxes they owe.
Here are six strategies for minimizing your crypto tax liability:
1. Hold your crypto for more than a year.
If you sell your crypto after holding it for more than a year, you will pay long-term capital gains tax rates, which are lower than short-term capital gains tax rates.
2. Use a tax-loss harvesting strategy.
If you have some crypto that has lost value, you can sell it to offset your gains from other crypto sales. This can help you reduce your overall tax liability.
3. Donate your crypto to charity.
You can deduct the fair market value of your crypto donation from your taxes.
4. Use a crypto IRA.
Crypto IRAs offer tax-advantaged investing. Your investments will grow tax-free, and you will not have to pay taxes on your profits until you withdraw them.
5. Consider using a decentralized exchange.
Decentralized exchanges do not report your transactions to the IRS. This can make it more difficult for the IRS to track your crypto gains and losses.
6. Be aware of the wash sale rule.
The wash sale rule prevents you from selling a crypto asset at a loss and then buying it back within 30 days. If you do this, you will not be able to deduct your loss on your taxes.
By following these strategies, you can minimize your crypto tax liability and keep more of your hard-earned money.
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