Tuesday, March 20, 2018

Yes, There Are Taxes On Your Crypto Gains

Quick post today as "bug season" is in full swing now and my time and attention is turning more toward killing ants and spiders for fun and profit.

There's a persistent myth in crypto circles that somehow this "magic internet money" exists outside of tax law. As such, I've come across many folks who insist that their hopping in and out of cryptos "doesn't count" unless they actually sell them for fiat currency. Here in the U.S., in a limited number of cases in the past this may have worked, provided things were done just-so, but that possibility was shut down with the passage of the 2017 tax reform law. Now if you sell or trade a crypto, it creates a taxable event.

Such is the cautionary tale of this poor fellow, who in his own words said, "I feel like I might have accidentally ruined my life because I didn't know about the taxes."

Take the advice given toward the end of the article: if you sell off a crypto asset for a gain, set aside 30% of the proceeds in something like a money market account so that your tax liability is fully funded when April 15th(ish) rolls around (keep records of losses, too, because you can use up to $3k of losses each year to offset other income on your taxes).

The rest of it is yours to drive Lambos across the moon with.

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