How to Cut Crypto Taxes Down to the Bone

Naturally, you want to minimize your crypto taxes so you can keep more of your money and maximize your gains. To do this, you first need a basic understanding of how cryptocurrency gains are taxed. Then you can start thinking about ways to reduce or eliminate your tax bill. 

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.

What are Crypto Taxes?

Now that you know a bit more about crypto taxes, which is really just another way of saying capital gains taxes, you will want a set of strategies to minimize how much you pay to the IRS. Here are some useful tips to reduce your tax bill.

How to Minimize Crypto Taxes

It may not be an easy task, but if you have the patience and fortitude to keep your crypto for at least a year before selling, then you’ll likely pay a reduced tax rate on any capital gain.

1. Hold Until Your Short-Term Gains Turn Into Long-Term Gains

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.

2. 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.

3. Sell In a Low-Income Year

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