Cryptocurrencies taxes- A guide for investors

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Today as part of the different regulations of many countries taxes are imposed on cryptocurrency investors and traders alike and ofcourse we know that the regulations guiding crypto use can be very tricky and a complex one indeed, for the investor too who is in the crypto market it might be difficult to even keep track of all his various transactions here some though may opt to seek for professional help to ensure they do not avert taxes hence am writing this helpful article meant to be a detailed breakdown as it regards cryptocurrencies taxes that maybe helpful for crypto investors to abide by taxes.

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Basic knowledge needed to abide to cryptocurrency taxes

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First of for one to properly abide by the taxes as required it's important for the person to understand the rules concerning cryptocurrencies taxation where he/she is living at, gaining proper understanding about this is crucial, so wherever we are it's important we conduct proper and comprehensive research to understand the taxation rules of the region as it concerns cryptocurrencies to better know how to navigate our way not to fail the tax rules in the first place.

It's vital also for every crypto investor and trader to be able to keep accurate records of their every transactions, I mean the only way you can ensure you keep to the tax rules as it regards the percentage you have to pay per profit or however the rule is in a place then it's very vital that one knows how to keep very clean, structured, detailed, comprehensive and accurate record of all transactions they carry out in the cryptocurrencies space that's the only way to ensure you are not overpaying or defaulting in anyway, I mean how will you even know what you are supposed to pay when you can't keep accurate record of your transactions, so record keeping is very important for crypto investors.

Also apart from record keeping it's important for individuals or organizations that are into cryptocurrencies to be able to know for sure the activities which demands for tax in the course of their transactions in the space, it's important for individuals to know if what we incur tax is when they sell their crypto for local fiat or when they purchase or trade a crypto asset either on spot or futures or it it using this cryptocurrencies asset to make purchases. They need to understand which of these events could trigger the paying of tax, because when they understand it, it will better help them to avoid tax when they are not ready for it and better plan themselves.

Also it's vital that they(investors) are able to perfectly calculate the gains and losses they make in a given transactions, yes this means being able to get net profit in any transactions or net loss, one invested in cryptocurrencies should be able to know how to do this as it's vital in determining how much tax they should pay, understanding what net profit = Selling price - Cost price. Which is the price you bought the crypto asset subtracted from the price you sold them at a later time that should determine net profit or loss as the case maybe.
Accurate calculation using this formula will help one determine his net profit which will help you understand depending on the rule of tax in a place if you are required to pay tax or not.

Also if one is actually involved in any facet of cryptocurrencies related activities like let's say one is mining cryptocurrencies that's something they should note too or staking crypto for hope of reward too from whatever ecosystem they are doing that in, it's vital that an accurate report or detail is recorded by the individual as to whatever profit they make from this iniative either all cost is deducted or capital at taking into consideration too the value of the asset during the purchase time.

Last but not the least for big cryptocurrencies organization it's advised that they seek professional help since they handle large volumes of transactions and also an accountant should be employed too to better keep a detailed report of all the transactions or maybe for individuals who handle large volumes of crypto transactions and do not really know the tax rules much and how they should keep to it then it's vital to employ the services of a professional, that will be the safest and most advisable thing to do so as not to default or evade tax due to ignorance.

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Conclusion

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These though not a professional advise in any way but simply my personal opinion of how I believe that investors could better understand their tax obligations as it regards cryptocurrencies, rather for educational and entertainment purpose and shouldn't be taken as a professional advise, if anyone needs a professional help then they should seek professional advise for those who are better place to give them and wish everyone good in whatever decisions they make🙂