How are taxes on cryptocurrency winnings calculated?

1 answers

• Dec 27, 2021 · 3 years ago
  At BYDFi, we understand that taxes on cryptocurrency winnings can be a confusing topic. The tax authorities treat cryptocurrencies as property, which means any gains from selling or trading them are subject to capital gains tax. To calculate the tax owed, you'll need to determine the cost basis of your cryptocurrency, which is the original value at the time of acquisition. When you sell or trade your cryptocurrency, you subtract the cost basis from the selling price to calculate the capital gains. If you held the cryptocurrency for less than a year, the gains are considered short-term and taxed at your ordinary income tax rate. If you held it for more than a year, the gains are considered long-term and taxed at a lower capital gains tax rate. It's important to keep accurate records of your transactions and consult with a tax professional to ensure you're complying with tax regulations and optimizing your tax strategy.
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