How to Minimize Crypto Taxes

Cryptocurrency is one of the hottest topics in the financial news right now. Although it’s a volatile market, statistics show that crypto investors have turned significant profits in the technology’s early innings. Over the past few years, we’ve certainly seen a lot of people make a lot of money by buying and selling virtual currencies.

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

When waiting for your crypto gains to convert from short- to long-term, you might also consider another timing element: Choosing to sell in a low-income year.

3. 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.

4. Reduce Your Taxable Income

Another strategy to minimize your crypto tax bill includes investing in a tax-deferred or tax-free Self-Directed Individual Retirement Account (SDIRA). 

5. Invest in Crypto in a Self-Directed Individual Retirement Account

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