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Crypto and taxes
NFT Taxes in the US - Complete Guide 2024Similar to gifting appreciated crypto to a family member, you might also think about donating your cryptocurrency to charity. Not only will this result in no capital gains tax, it can also trigger a significant tax deduction you can claim on your tax return. Tax cryptocurrency Form 8949 is where you report crypto sales and gains generated. The tax rate depends on the state you live in, how long you held the asset, and your tax bracket.
Capital gains on cryptocurrencyHolding your cryptocurrencies for over a year before you sell them can reduce your tax liability even when you live abroad. Instead of being taxed on capital gains from cryptocurrency at your regular tax bracket, long-term capital gains tax is applied on a graduated scale that’s regularly adjusted. For example, in 2022, the tax rate for long-term capital gains from cryptocurrency will be at most 20%. Depending on your income and filing status, the tax rate may be 0% or 15%. Calculate Crypto Taxes Now! Aside from your crypto capital gains and losses, you may have also received additional income from your crypto holdings. Examples include staking, acquiring crypto as a form of payment, air-dropping, mining, or even earning coins or tokens through play-to-earn games. How to report digital asset transactionsAfter you determine whether your gain or loss is short-term or long-term, you’ll need to enter the details of the transaction in the appropriate section of Form 8949. Every transaction requires the same pieces of information, entered in either Part 1 (for short-term transactions) or Part 2 (for long-term trades), in the relevant column. Do You Have to Pay U.S. Taxes on Cryptocurrency Gains if You Live Abroad? A key distinction between cryptocurrency and fiat money (like the US dollar) is that cryptocurrency is viewed as property rather than as a currency in the US by the Internal Revenue Service (IRS). This means that the taxation rules for cryptocurrency are those which apply for capital assets, a subset of property. There is no one clear rule which dictates how your cryptocurrency transactions will be taxed, but rather the IRS has released a set of
Selling crypto taxesCryptocurrency brokers and exchanges are required to issue 1099 forms to their clients for the current tax year. Can I avoid paying tax on crypto? *TurboTax Investor Center is not a tax prep service or investment advisor. Tax estimates exclude missing transaction info and may vary based on your situation. |
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