Don’t Make These Tax Mistakes When Dealing with Bitcoin/Crypto
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How do you stay on top of your Bitcoin/crypto taxes and lower them?
Before continuing, I am more knowledgeable about the tax implications for crypto trading in Australia than in the United States. So, for the latter — which would apply to most of you reading this — I am relying on researched information instead of speaking from experience.
Despite this, these are all important considerations to make before executing trades. Why is this? There are similarities between capital gains tax (CGT) schemes in Australia, the USA and other developed Anglophone countries regarding short-term and long-term profits and losses.
Generally speaking, short-term gains are those made from assets that you held for less than one year, and these tend to attract a much higher CGT (often taxed as ordinary income) than long-term holds of more than a year.
So, what’s one set of trades that has thrown many people off guard?
Swapping from a native coin (e.g., BTC, ETH, BNB) to a wrapped token — one that is typically pegged to the coin’s price and is created to be readily traded on a DEX or to be used for liquid staking — is subject to capital gains tax (CGT).
