Whereas 2022 has been a yr to neglect for many crypto buyers, the daunting process of submitting crypto tax returns earlier than the tip of December stays. Many buyers fear about unrealized losses on their crypto portfolio, whereas a failure to report crypto belongings and transactions on tax returns may land North American buyers into sizzling water with the IRS.
To help in submitting your crypto taxes, cryptocurrency portfolio monitoring and tax platform Accointing by Glassnode presents a simple resolution to immediately import and evaluation all crypto transactions and fill your crypto taxes in simply a few clicks. What’s extra, its tax loss harvesting instrument helps buyers reduce what they owe in taxes.
How one can optimize your crypto tax return?
Most crypto belongings, particularly cryptocurrencies like Bitcoin, have seen important value erosion in 2022. Some crypto buyers could also be tempted to cut back their tax invoice by underreporting revenue. Such a method, nonetheless, would invariably result in punitive motion initiated by the IRS. To keep away from that, US crypto buyers want to grasp all tax provisions out there and make the most of them to optimize their tax legal responsibility to the fullest.
For instance, suppose losses from promoting crypto belongings exceed capital positive aspects accrued by promoting worthwhile positions. In that case, buyers can deduct as much as $3,000 towards unusual revenue and carry ahead any remaining loss to the following accounting yr. This extra can then be adjusted towards any capital positive aspects arising within the following yr.
Buyers may additionally promote digital belongings which are buying and selling at a value decrease than their acquisition price, solely to purchase them later throughout the identical yr. Though the IRS has excluded shares and securities from this tax-saving tactic, crypto belongings aren’t handled equally. Consequently, realized loss can be utilized to offset any capital positive aspects tax whereas additionally permitting buyers to keep up their internet holdings.
How crypto tax loss harvesting reduces your tax invoice
When an investor has made a internet revenue from all crypto transactions in a yr, positions presently incurring a loss equal to the capital positive aspects accrued will be bought. The loss from these positions can neutralize a portion of the capital positive aspects, thereby decreasing the general tax sum. This technique of claiming is called tax loss harvesting. Nonetheless, opposite to common notion, tax loss harvesting isn’t the identical as realizing losses and entails many calculations.
The largest challenges are figuring out which crypto belongings should be bought and in addition computing the extent of loss relevant to these positions. Positions bought inside three hundred and sixty five days are subjected to short-term capital positive aspects tax charges, whereas these held for greater than a yr are handled as long-term capital positive aspects.
Say “Good day” to Accointing’s common crypto tax calculator
Many crypto tax calculator suppliers available on the market cost a month-to-month payment, making these instruments untenable for many retail crypto buyers.
That is the place Accointing’s portfolio monitoring and compliance resolution can profit the 27-million-strong U.S. crypto investor base. Its complete crypto tax calculator is offered at no cost till Dec. 31, 2022 and exhibits you precisely how a lot it can save you on taxes this yr.
Utilizing the tax loss harvesting instrument, buyers can evaluation which crypto tokens to promote with a view to offset any capital positive aspects, making tax loss harvesting a easy exercise. Moreover, it solely takes 5 clicks to get an correct tax report for transactions occurring inside 2022, with Accointing’s crypto tax calculator able to producing stories for portfolios containing as much as 50,000 transactions in a calendar yr.
With simply days left earlier than the shut of 2022, Accointing’s crypto tax software program can save crypto buyers lots of trouble and assist them optimize their tax returns by using its priceless tax loss harvesting instrument. With Accointing acquired by on-chain market intelligence supplier Glassnode in October 2022, its customers will finally profit from the mixed funding intelligence insights offered by the 2 corporations.
Disclaimer. Cointelegraph doesn’t endorse any content material or product on this web page. Whereas we goal at offering you with all vital info that we may get hold of, readers ought to do their very own analysis earlier than taking any actions associated to the corporate and carry full duty for his or her choices, nor can this text be thought of as funding recommendation.
