9 Ways to Cut Crypto Taxes Down to the Bone
Cryptocurrency is considered “property” for federal income tax purposes. And, for the typical investor, the IRS treats it as a capital asset. As a result, crypto taxes are no different than the taxes you pay on any other gain realized on the sale or exchange of a capital asset.
As just noted, different capital gains rates will apply depending on how long you own cryptocurrency. If you want to lower your tax bill, hold your cryptocurrency long enough to turn your short-term gains into long-term gains.
Hold Until Your Short-Term Gains Turn Into Long-Term Gains
Another strategy for lowering the taxes crypto investors must pay is to offset capital gains with capital losses. This works by subtracting losses on crypto assets that you sold during the year from taxable gains on cryptocurrencies or other investments that have appreciated in value.
Offset Capital Gains with Capital Losses
Selling in a low-income year can help with taxes on both short-term and long-term gains. If you have short-term gains, which are taxed as ordinary income, you won’t have as much other income added on that pushes you into a higher tax bracket.
Sell In a Low-Income Year
Closely related to selling your appreciated investments in a low-income year, another tried-and-true tax minimization strategy involves lowering your taxable income. This means scouring the tax code for tax deductions and credits that can bring your taxable income down.
Reduce Your Taxable Income
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