The best tax advice for Crypto Traders

Keep track your tax by keeping track of your crypto trades

The easiest way to keep on top of your crypto taxes as a trader, is to keep on top of your trades – including buys, sells, trades, and any other forms of exchange. Use a tracking tool or spreadsheet to record the date, time, amount, and cost basis of each transaction. But that’s only one consideration you have to make. You should also:

• Understand Taxable Events: Any time you dispose of cryptocurrency, you trigger a taxable event. This includes selling, trading, or exchanging cryptocurrency for goods or services. Make sure you understand the tax implications of each of these events.
• Know Your Holding Period: The length of time you hold your cryptocurrency can affect your tax liability. If you hold your cryptocurrency for less than a year before selling or exchanging it, you may be subject to short-term capital gains tax. If you hold your cryptocurrency for more than a year before selling or exchanging it, you may be subject to long-term capital gains tax, which is usually lower.
• Be Aware of Wash Sales: If you sell cryptocurrency at a loss and then buy the same or a substantially identical cryptocurrency within 30 days, the loss may be disallowed under the wash sale rule. Be careful not to trigger this rule inadvertently.
• Consider Using Tax-Loss Harvesting: Tax-loss harvesting is a strategy where you sell cryptocurrency at a loss to offset gains in other investments. This can help lower your overall tax liability.
• Report Your Crypto Income: If you receive cryptocurrency as payment for goods or services, you must report the fair market value of the cryptocurrency as income on your tax return.