Fortunately, the IRS has created a guide for individuals and businesses on how to fill out their tax returns. It's important to note that you are required to report all taxable transactions, and the failure to do so could result in penalties. However, there are a few things that you can do right now to make the process smoother or even pay less...
You Might Want to Sell at a Loss
Not many people know this, but you can actually 'profit' from your losses. If you are currently holding Bitcoin or any crypto and you sell it at a loss, you can deduct up to $3,000 of losses against other types of income.
This is called a net capital loss, and it's used as a strategy by many investors. Considering that the crypto market plummeted and took a beating over the past year, many investors have significant losses. These losses actually reduce taxable income.
One of the huge benefits crypto has over other assets is that the "Wash sale rule" does not apply. This rule states that once you sell something at a loss, you are not able to repurchase it until "x" days have passed; however, this does not apply to cryptocurrencies, which means that you can sell your losing positions to fill your taxes and re-buy them later on.
Use the Help of a Professional
Crypto taxation is still new, and although the IRS has come up with guidelines on how to do it, it is always best to contact a professional in this field. Crypto tax advisors most likely already know all the tricks and tips mentioned in this article and can apply them quickly.
Furthermore, you can easily find online tax calculat...