We're getting questions about taxes and crypto.
Let us cover some of the rules.
If you sell your position in crypto, you're taxed on the profits just like any other investment. Sales proceeds less your cost basis equals profit. And you pay tax on the profit.
Crypto is a capital asset meaning it's subject to long term and short term capital gains tax rates. If you held your position for more than a year, you qualify for LOWER long term capital gains rates.
BONUS TIP, if your sales proceeds are less than cost basis, you have a DEDUCTIBLE loss.
If you're taking profits and reinvesting into another crypto, you still owe tax on the profits from the sale. So look at your numbers to make sure this makes sense.
If you convert your crypto into another crypto, this counts as a sale of your crypto and you owe tax on the gain.
If you pay for goods or services in crypto, your purchase counts as a sale of your crypto and you owe tax on the gain.
If you mine crypto or receive crypto as payment for goods or services, it counts as part of your taxable income and you're taxed at your regular income tax rate. If you hold the crypto that was mined or recieved as payment for goods or services and sell at a later date, you owe tax on the gain.
Pretty much any transaction or sale of crypto results in a taxable event. If you have any questions, feel free to reach out to our team!