Reduce your crypto tax using this method

Reduce your crypto tax using this method

By Cryptohem | My crypto knowledge 2020 | 31 May 2020


In this era cryprocurrency has been start recognising as our wealth asset hence it has become laible to pay tax from the profit we get by investing in different platform. Lately this week many countries are also adopting different law against the use of cryptocurrency by charging tax from the profit gained on trading and mining cryptocurrency. This makes people hard to collect their profolio of gain or lose for their cryto asset in order to pay the tax. There are some method to reduce those issue making investor tax friendly

Here are some tips in order to curbs those problem

Opening a Retirement Account

In country like US opening a retirement accounts is very helpful against reducing crypto tax manily for the investors. But there is a deadline for opening and contributing to the account you are holding. The main benefit of opening such account is that it came along with some incentive on paying tax and also sometime by opening this account people can forbit from paying any amount of tax from purchasing cryptocurrency. Cryptocurrency IRA can be an effective tax reducing method if you believe in the long-term value of cryptocurrencies. 

Eg :crypto 401k, cryptocurrency IRA account.

Holding crypto for more than One Year

This method is mainly practising in Germany. Where people are forbit from paying any tax from investing crypto if they hold crypto for more than one year.Similar to staking where people hold their crypto for certain amount of time till it mature, by holding your cryptocurrency investment for longer than one year can divert people from paying their long term profit tax. rates. In addition to this method peoplee can also  identified the coin which they have  held for longer than one year and  sell them. Hence it will help them  reduce their overall tax payment

Choose an Opportunity Zone Fund

Opportunity zone is an place where new crypto investments are eligible for preferential tax treatment under certain condition. In this condition When an investor sells his/her crypro asset and accumulates some profit from it then they can , he or she can roll any amount of the profit into an qualified Opportunity Zone Fund within 180 days of the sale. Doing this the investor can forbit from paying profit tax until 2026. This strategy is mainly useful for bitcoin investor who have large amount of gain from investing.

Tax Software

Apart from opening account and choosing best opportunity fund simple and best way to save from paying gain tax is bybusing a cryptocurrency tax software. Here investore have to simple plug in theire trade history into a crypto tax software just like connecting a crypto exchange account. By doing this the software will automaticaly generate the profit and loss report in no time.Using this tools investors can analyse their gain and lose report which help them  in minimising their tax to certain amount.

Here are top three crypto tax software taxbit, tokentax, beartax

Hope this tips will help all those crypto tax payers out here.

Source

https://bitcoinmagazine.com/articles/5-tips-for-minimizing-your-bitcoin-and-crypto-taxes

 

How do you rate this article?


6

0

Cryptohem
Cryptohem

A music lover,crypto enthusiatic,blogger and a writer. Crypto will cope the world


My crypto knowledge 2020
My crypto knowledge 2020

I am new in crypto world .but i am sharing whatever i knew about the latest crypto information.

Send a $0.01 microtip in crypto to the author, and earn yourself as you read!

20% to author / 80% to me.
We pay the tips from our rewards pool.