What about the fees crypto traders sometimes incur when buying or selling digital assets on exchanges or other platforms? Can this reduce your taxable profit?
So let’s say I buy bitcoin on Coinbase. Coinbase charges me, let’s say, a 3 percent fee. This fee can be added to my base of the asset I bought. If I bought $100 worth of bitcoin but also pay that $3 fee, my base in that bitcoin is now actually $103. Turning it over and selling it is an advantage for me: I don’t earn as much because my base is higher.
What questions do you hear most often?
A lot of people ask, “Hey, that’s not taxable until I pay it out in fiat, right?” And the reality is, “No.”
If you dispose of assets, whether or not you actually revert to US dollars, you can still receive a tax bill.
So, even if I use my bitcoin to buy another cryptocurrency like ether, can I still be taxed on any gains I saw from my original investment?
Let’s say you buy Ethereum on Coinbase for $1,000 and you hold it for a few months and it snaps – it’s at $2,000 now. You sell it to buy stablecoins or bitcoin. If it was $1,000 at the time of purchase, you realized $1,000 in capital gains
What about tax evasion? Are there already tax lawyers specializing in cryptoshelter – or whatever in the blockchain world?
There are many tax lawyers who have carved a niche for themselves in the world of digital assets. And many of these people can definitely help from a tax planning and tax avoidance perspective. No one we work with helps tax evasion – it’s illegal. but There are many smart people who can help you reduce your taxes with proper planning.
Do you have a sense of the overall tax compliance rate?
In our survey, we found that over 50 percent of crypto investors report their digital asset activity in their taxes. And we will see the number continue to increase dramatically in the coming years.
https://www.nytimes.com/2022/03/26/your-money/taxes-crypto-nfts.html How to File Taxes If You Sold Crypto in 2021