Generally we all know that cryptocurrencies have become a hot topic these days, but their tax implications can be confusing. Here's a breakdown to help you navigate the landscape:

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When crypto is taxed

Selling or spending crypto: The IRS treats crypto like property, so selling it for a profit triggers capital gains taxes, just like stocks. Using crypto to purchase goods or services is also considered a taxable event.

Receiving crypto as income: If you receive crypto as payment for work or do it yourself, it is taxed as income based on its fair market value at the time of receipt.

Understanding Capital Gains

Capital gains tax depends on how long you held the crypto before selling (short-term or long-term) and your income tax bracket.

Short-term gains (less than one year): Taxed as ordinary income up to 37%.

Long-term gains (over a year): Can benefit from lower rates between 0% and 20%.

Keeping track of records

The burden of reporting crypto transactions falls on you. Maintain good records of purchase prices, transaction dates and sales proceeds.

Without proper records, your cost basis (original purchase price) defaults to zero, resulting in higher capital gains taxes.

Asking for help

Crypto tax regulations are complex. Consider consulting a tax professional who specializes in crypto to ensure accurate reporting and avoid tax penalties.

Additional Resources

Resources are available to help you better understand crypto taxes. You can search Coinbase Understanding Crypto Tax or Investopedia Cryptocurrency Tax for more information.

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So friends, that's it for today. Let me know how you like my short discussion today in the comment box! I am ending here wishing everyone good health. All be well and stay healthy.

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Thank You

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