Understanding tax laws for cryptocurrency trades

Before handing over the job to a crypto lawyer, it is essential to understand a few things about crypto laws on tax deductions. Suppose you traded a few cryptocurrencies like ether, bitcoin, and a few others via crypto exchanges such as Coinbase, Binance, or Gemini. However, with a crypto downturn, you ended up experiencing a capital loss of approximately $30,000. This is a massive amount, and you may already get headaches as you plan a strategy to revive this figure.

However, another headache that will soon grasp your head is filing taxes. If you don’t do it correctly, you may end up paying another $30,000 as penalties. Bitcoin was up by 686% in 2017, but its market went down significantly in 2018, resulting in a 55% below-par price. So, filing taxes for the income from 2018 is different from that of 2017. Investors will look to claim capital losses to reduce their tax bills, especially after such a bearish year.

So, if you are doing the same thing, you will maximize your capital loss claims by:

• Rolling over all your capital losses to the next financial year.

• Offset all your capital gains with other classes of assets in the current taxable year.

• Use the remaining capital losses to offset at least $3000 from your income.