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How can I minimize my tax liability on unearned income from cryptocurrencies?

avatarChristopher MacatangayDec 27, 2021 · 3 years ago3 answers

I have earned income from cryptocurrencies and I want to minimize my tax liability. What strategies can I use to reduce the amount of taxes I owe on my unearned income from cryptocurrencies?

How can I minimize my tax liability on unearned income from cryptocurrencies?

3 answers

  • avatarDec 27, 2021 · 3 years ago
    One strategy to minimize your tax liability on unearned income from cryptocurrencies is to hold your investments for at least one year. By doing so, you may qualify for long-term capital gains tax rates, which are typically lower than short-term rates. This can help reduce the amount of taxes you owe on your earnings.
  • avatarDec 27, 2021 · 3 years ago
    Another way to minimize your tax liability is to take advantage of tax deductions and credits. For example, you may be able to deduct certain expenses related to your cryptocurrency investments, such as transaction fees or the cost of hiring a tax professional. Additionally, you may qualify for tax credits, such as the foreign tax credit if you have earned income from cryptocurrencies in foreign countries.
  • avatarDec 27, 2021 · 3 years ago
    At BYDFi, we recommend consulting with a tax professional who specializes in cryptocurrency taxation. They can provide personalized advice based on your specific situation and help you navigate the complex tax laws surrounding cryptocurrencies. They can also help you identify any potential tax credits or deductions you may be eligible for, ensuring you minimize your tax liability while staying compliant with the law.