Six Ways to Lower Cryptocurrency Gains Taxes

Six Ways to Lower Cryptocurrency Gains Taxes

Use a Self-Directed IRA (Self-Directed Individual Retirement Account) – A self-directed IRA is a form of retirement account created for alternative investments...

Use the 0% Long-Term Capital Gains Tax Rate — Capital gain is the difference between the price you paid for an item and the price you received...

Donate to Charity - You can avoid paying taxes on digital currencies if you donate them directly to a charity.

Take Advantage of Tax Loss Harvesting – Tax loss harvesting is the process of selling assets at a loss in order to lower your tax liability.

Use the method of highest-in-first-out –

It can be difficult to determine which precise assets you've sold when you own many units of a digital currency acquired at different times.
When the basis amounts differ, it's critical to figure out which assets you've sold.
Cryptocurrencies will be assumed to have been sold on a first-in, first-out basis by default.
However, the IRS recently stated that you can choose whatever assets you want to sell if you can identify the following:

1. The date and time you bought each unit, 2. the fair market value at the time you bought it, 3. the date and time you sold it, and 4. the fair market value at the time of sale.

You can optimise your results by hand-picking the assets you've sold.

Donate to Charity - You can avoid paying taxes on digital currencies if you donate them directly to a charity.