What is cryptocurrency tax?
Crypto tax follows the same principle as regular tax. With regular tax, you know that you are taxed based on the amount of liquidity you earn in a year. Cryptocurrency tax focuses specifically on how much you gained from your digital assets.
Any profit made on digital assets such as Bitcoin, cryptocurrencies and altcoins are considered as capital gains, therefore any profit made from selling these coins is going to require some form of tax to be paid, which is explored more for Bitcoin by Harvex here.
However, hodling coins does not count as a taxable event, and if you have made losses, you may be able to deduct these from your earnings, and reduce your tax.
How do I calculate my crypto tax?
It can be easy to lose track of your earnings, spendings, and accounts. Crypto tax companies have their own digital asset tax calculator, to simplify the process of calculating your tax amount, and working out how much you owe, as well as offering additional support from experienced crypto accountants.
So, what sounds like a complicated numbers game, can be made simple by using online services provided by specialists in the crypto accounts world.
Calculating your crypto tax is pretty Simple.
- Input your crypto profit amount
- Find how much tax you owe
Why use a Crypto Tax Website?
- Import trades from exchanges
- Import spending from exchanges
- Import mining history
- Calculate capital gains
- Report balances and remaining costs
If you are considering selling your digital assets in order to purchase a new car, new property, family holiday, or for further investment because you don’t have enough funds at the time – then a crypto loan may be for you.
As opposed to selling your hard earned digital assets, crypto loans allow you to use your crypto as collateral in exchange for liquidity – so you’re able to purchase what you need, without having to worry about crypto tax.
What is a taxable event?
Pretty much anything you gain profit on counts as a taxable event. So, if you are making profit from your crypto, or being paid by an employer in crypto – then you do indeed have to pay tax.
As obvious as it may sound now, many people still do not realise that selling cryptocurrency can be a taxable event. Many people has made the mistake of selling their BTC, only to realise that you must pay tax.
Examples of a taxable crypto event:
- Being paid in cryptocurrency
- Selling your cryptocurrency
- Crypto mining
Avoid making the mistake that others have made, and do your research on unexpected fees when it comes to selling anything that you will make a profit on, especially when the profit can be so huge.