Nowadays, most cryptocurrencies are convertible to fiat currencies, meaning that they act as a medium of a store of value, a unit of account, exchange, and can get substituted for real money.
As a result, cryptocurrency is taxable. If you activate a taxable event, you’ll owe tax to the IRS. To learn more about the cryptocurrency tax rules and what they entail, see the following:
When is cryptocurrency taxed?
On their own, cryptocurrencies aren’t taxable. For the currency to be eligible for capital gains tax, you must have a taxable event. Such as:
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Non-taxable event |
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Tax for cryptocurrency in the USA is determined by the cryptocurrency’s movement. If you trigger one of the above events, the IRS will require you to declare the crypto as capital gains.
Also note that cash loans can be made by a bank, an employer, or through peer-to-peer lending networks, and because they must be repaid, they are also not taxable. This in combination with optimized cryptocurrency investments yield best results for investors.
How is cryptocurrency taxed?
Because the IRS considers cryptocurrencies as capital assets, they activate tax events when used as payment or when they’re cashed in. Therefore, you’ll pay capital gain tax if you sell, exchange, or use crypto that has an increase in value.
How much you’ll pay is determined by a few factors: the holding period of the asset, taxable income, and filing status. If you’ve held your crypto for less than a year and triggered a tax event, you’ll pay short-term capital gains tax (your ordinary tax bracket). In contrast, anything over a year will be long-term capital gain tax, which can be anywhere between 0 to 20%.
Crypto taxes act similarly to taxes on other assets or property. When they’re used, and gains are achieved, they generate taxable events for the owners.
Is it possible to avoid cryptocurrency tax?
Tax for cryptocurrency in the USA is somewhat confusing for many. When people are unaware of this, the IRS will issue an unexpected fine or penalty. Undoubtedly, you want to avoid this. But what if we told you there was a legal way to transfer cryptocurrency into real-life assets tax-free?
With Bridgecoin, it’s possible. Our organization’s skills are split between real estate and cryptocurrency. By specializing in both areas, we’ve developed a spectacular process that enables you to invest crypto into real estate, deferring capital gains.
If you’re holding unrealized capital gains and want to re-invest it into cash-flowing real estate tax-free, then we recommend contacting a helpful representative at Bridgecoin today. We utilize non-taxable cash loans in combination with unrealized capital gains to yield best results for investors.
