Crypto-Tuesday January 31, 2023 – If you’re like most crypto enthusiasts, you’re probably not too thrilled about the recent losses in the market. But did you know that there may be a silver lining? In some cases, your crypto losses can actually lead to tax gains! Here’s how it works…
When you sell cryptocurrency, the proceeds are considered a capital asset and could be subject to either short-term or long-term capital gains taxes. Short-term capital gains are taxed as ordinary income, meaning that they’re subject to your marginal tax rate. Long-term capital gains, on the other hand, receive preferential tax treatment and are taxed at a lower rate than ordinary income.
Fortunately, when it comes to crypto losses, the Internal Revenue Service (IRS) gives you the ability to deduct them from your other gains in the same tax year. This means that if you have a net loss of cryptocurrency during the year, you can use it to offset any other gains you may have made, reducing the amount of taxes you owe.
The good news is that these losses can also be carried forward to future tax years. This means that if your losses exceed your other gains during a given year, you can still deduct them from your taxable income in future years.
Ultimately, it pays to know the tax implications of your cryptocurrency losses and how they can be used to offset other gains. By doing so, you could be saving yourself some coin when Tax Day rolls around!
Attorney Steven A. Leahy reveals the Crypto-Tax secrets on Today’s Tax Talk!
Steven A. Leahy is a tax attorney in Illinois. He was the host of the long-running popular Radio Show “The IRS Radio Hour” heard every Sunday evening on AM 560 The Answer. Attorney Leahy is also the author of the book “Deal With Your IRS Problems Today!” You can get a FREE copy of this important book at FreeIRSBook.com. Or Call 24/7 (312)664-6649