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How to Owe Less Tax on Crypto Gains
Cryptocurrency is a digital asset, so when taxes are owed, they are either ordinary income or capital gains
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Author: Rate My Tax Accountant
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Published: November 4, 2023
When Cryptocurrency is Not Taxed
- Buying and holding - buying or investing in cryptocurrencies without exchanging or selling them
- Transferring between wallets
- Making payments
When Cryptocurrency is Taxed
- Getting paid wages/salary in crypto currency (Ordinary Income)
- Selling for a profit less than 1 year after purchase of cryptocurrency (Ordinary Income)
- Selling for a profit 1 year or more after purchase of cryptocurrency (Capital Gain)
- Mining or Staking (Ordinary Income)
- Trading one Cryptocurrency for another
A general rule of thumb is, if you hold your earning for a year or more, they are subject to a lower tax rate, depending on your current bracket (Capital Gains).
Losses can be claimed to a certain limit, depending on filing status.
***Disclaimer: This article is for informational purposes and is not meant to be financial or legal advice***