How do short term and long term capital gains taxes apply to profits from cryptocurrency trading?

3 answers

• Jan 13, 2022 · 3 years ago
  When it comes to capital gains taxes on profits from cryptocurrency trading, the duration of your holding period plays a significant role. Short term capital gains apply to assets held for less than a year, while long term capital gains apply to assets held for more than a year. Short term gains are typically taxed at your ordinary income tax rate, which can be quite high. On the other hand, long term gains are subject to lower tax rates, often ranging from 0% to 20% depending on your income level. It's important to consult with a tax professional to understand the specific tax rules and rates that apply to your situation.
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• Jan 13, 2022 · 3 years ago
  Alright, so here's the deal with capital gains taxes and cryptocurrency trading. If you hold onto your crypto for less than a year before selling it, you'll be hit with short term capital gains taxes. These can be pretty hefty, as they're taxed at the same rate as your regular income. But if you manage to hold onto your crypto for more than a year, you'll be eligible for long term capital gains taxes. These are usually lower and can range from 0% to 20% depending on your income level. So, if you're looking to minimize your tax bill, it might be worth considering holding onto your crypto for the long term.
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• Jan 13, 2022 · 3 years ago
  When it comes to capital gains taxes on profits from cryptocurrency trading, the rules are pretty similar to those for stocks and other investments. If you hold onto your cryptocurrency for less than a year before selling it, you'll be subject to short term capital gains taxes. These are taxed at your ordinary income tax rate, which can be quite high. However, if you hold onto your cryptocurrency for more than a year, you'll qualify for long term capital gains taxes. These are typically taxed at a lower rate, ranging from 0% to 20% depending on your income level. It's important to keep accurate records of your trades and consult with a tax professional to ensure you're complying with the tax laws in your jurisdiction.
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