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What you need to know about Bitcoin and Taxes



Cryptocurrency has been gaining immense popularity in recent times and Bitcoin is the most popular cryptocurrency among a large number of individuals who purchase it due to the Bitcoin
evolution over the recent years. But whenever the Bitcoin is traded, bought or sold, there is a tax consequence because it is considered as property which means that you have to pay tax for any profits that you earn from the buying and selling of the Bitcoin. The taxing of this crypto-currency has been legalized in the year 2018 which indicates that it has a capital main implication. Hence if you trade, buy or sell Bitcoin then you will need to pay taxes for the same and you can also minimize the taxes on the Bitcoin transactions by following different ways in which taxes can be reduced.

With Bitcoin evolution, there have been different rules and regulations pertaining to Bitcoin and taxes for which you will need to calculate the capital gains and losses. It is also important that you identify your trades so that you can optimize your taxes in an efficient manner and for this, you will need to know the cost basis of each Bitcoin that you buy and sell. The most important thing is that you will need to report all the gains and losses on every Bitcoin transactions and you are under obligation to report all your income and transactions to the IRS. The crypto taxes are treated in a different manner from one country to another and you will need to consult the local tax advisor of your country for confirming your tax reporting obligations.
The Bitcoin investors have been under the tax regime which means they will also have to pay taxes for their capital gains and you will also have to declare as well as pay relevant taxes relating to the Bitcoin transactions.

Cryptocurrency investors have tax liabilities for their trading activities because cryptocurrencies are considered as a capital asset and it creates a taxable event for the gain relating to its transactions. Moreover, the losses that you incur on the cryptocurrency can also be used for leveraging your overall taxable income as it is the best way of saving money on your tax bill. Buying of the Bitcoin is not considered as a taxable event but when you use this cryptocurrency for buying something else then
it becomes a taxable event and you will have to pay taxes for the same. You will also be liable to report the short term capital gains that you earn when you sell Bitcoin as it will be taxable and you will have to pay the normal income tax rate on the number of capital gains that you have earned from the
transactions. But if you have sold the Bitcoin after holding it for more than a year then you will have to pay taxes at a lower rate because it will be long-term capital gains. Moreover, when you suffer losses from the sale of Bitcoin then you will get short or long term capital loses that will be used for

offsetting capital gains that will help in lowering of the total tax amount.

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