As crypto currencies continue to make headlines, more people are interested in trading or investing their money into digital coins. While there are many benefits of owning crypto currencies like Bitcoin and Ethereum, one factor most casual investors may not be aware of is the tax implications that come with these investments.
If you’re interested in learning how to maintain your crypto capital gain taxes, this article is for you. Below you will find a list of guidelines and helpful tax tips.
The IRS provides some advice on how to handle crypto gains and losses; however, there are limited resources from the agency itself. The IRS does not provide any information on individual cases, so it’s up to individuals to consult with an accountant or attorney with experience in the field of virtual currencies. As such, this article provides general guidelines as well as links that helps you to maintain your crypto capital gain tax.
What are the taxes and Other Issues Affecting Crypto Capital Gain Investing ?
Crypto is a digital currency that uses encryption to regulate the creation of units of currency and control the transfer of funds. Bitcoins gained widespread media attention in 2013 and are now traded on hundreds of exchanges globally. So here are the various issues discussed here that affect crypto gain investing.
- The current US regulation system: The United States Congress and their associated government agencies have defined crypto as a commodity with tax implications, which means crypto gains are taxed in the same way as gains from stocks, bonds, or other commodities. This can result in double taxation on holdings where crypto gains offset losses from traditional investments.
- It will be a mass adoption: Most of the Cryptocurrencies are not only limited to the number of coins available but also to its volume and frequency of transactions. The issues that affect Crypto Gain Investing are in the process to resolve it by establishing foundations or associations.
- Most popular exchanges have been hacked: There is no doubt that another issue that affects Crypto Gain Investing is cyber hacking. Our aim is to prevent any illegal entry into your account by using different techniques. This problem is solved by using some best crypto tax software by which you keep an eye on all your transactions.
- The government will not control crypto trading: One of the issues that affect Crypto Gain Investing is that many governments still do not recognise digital currency as a legal tender, and there are security risks associated with digital wallets.
- Lack of legal protection: The lack of financial backing by governments and insurers makes crypto currencies in a very risky investment, with many people losing their funds. As soon as a significant amount is deposited in crypto trading platforms, the exchange may go under and then you are unable to withdraw your funds.
- Inadequate infrastructure: With no central governing authority, high fees, and limited liquidity, there’s little reason to use digital currencies other than for speculative purposes rather than as a medium of exchange. The issue that affects Crypto Gain Investing is that its price fluctuates rapidly and suddenly so any plans will be disrupted.
Binocs is one of the best services which you can use to calculate crypto capital gain taxes automatically. It is easy to use and provides you with the facilities that you actually need.