Chapter 21

Taxes and Cryptocurrencies

IN THIS CHAPTER

Bullet Getting to know the taxes you may need to pay for your crypto activities

Bullet Curtailing your crypto income taxes and capital gain taxes

Bullet Evaluating and tracking your taxable income and capital gains

Before the 2017 crypto hype, many people who got into cryptocurrencies (whether through mining or investing) probably didn’t even think about its tax implications. But as cryptocurrency investing becomes more mainstream, its taxation guidelines have taken center stage. In this chapter, I review the basics of cryptocurrency taxation.

Remember Keep in mind that these guidelines are based on the U.S. tax laws as of 2018. Depending on your crypto investment time frame, type of profit, and personal financial situation, you may need to consult with an accountant to get ready for tax day.

Distinguishing Three Types of Crypto Taxes

The tax setup for cryptos is complicated, to the point that U.S. lawmakers submitted an open letter to the Internal Revenue Service (IRS) in September 2018 asking it to make cryptocurrency taxations simpler. (You can see the ...

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