Crypto News

Turn Your Crypto Losses Into Tax Savings: Strategies to Maximize Your Tax Benefits

Published

8 months ago

April 4, 2023

Want help with your crypto taxes? Check out The Decrypt 2023 U.S. Tax Guide. It’s free, and there’s a fun quiz at the end so you can receive a free Proof-of-Knowledge certificate in the form of an NFT.

While everyone purchases investments with the belief that they will appreciate in value, no one has a perfect investing record. This is particularly true in the crypto investing sector due to its notable volatility when compared to more established asset classes. This has led some early crypto investors to become extremely wealthy.

While these successful investors draw positive attention to this market with viral articles on their investment returns, every market—and trade—has two parties: a winner and a loser. While there aren’t many upsides to “buy high, sell low,” we break down how a crypto investment loss can turn into a partial win through a process called tax-loss harvesting.

One upside to seeing your crypto investments in the red (being worth less than your original purchase price) is the ability to sell these investments at a loss in order to harvest capital losses that can be used to offset — or lower — your tax obligations. When an asset is sold for a loss, you can deduct some or all of this loss on your taxes. This is what is referred to as tax-loss harvesting.

The process for claiming crypto capital losses on litecoin (LTC) , bitcoin (BTC), and other digital assets is the same process one would use to claim capital losses on stocks, commodities, or other applicable investments. This is why the strategic selling of crypto (or any asset) at a net loss is often utilized by savvy investors and recommended by knowledgeable tax advisors.

One thing to know is that the Internal Revenue Service (IRS) requires you to report all crypto sales. As the IRS considers crypto “property,” these sales must be reported to be properly filing your annual tax returns. It doesn’t matter if these sales are profitable or not; the IRS wants to know about every crypto asset sold. As this is already a reporting requirement, it is in your best interest to understand how these unprofitable sales can be ameliorated through tax-loss harvesting. To be compliant, you are required to fill out Form 8949 and a 1040 Schedule D. You list your crypto sales — both profitable and unprofitable — on Form 8949. The 1040 Schedule D lists both your short-term and long-term capital gains and losses. If you’ve harvested losses from previous years, you also include those losses on this form.

Another key consideration is deciding how you want to harvest these losses. There are two options; you can do this through income tax deductions or via offsetting your capital gains. Offsetting capital gains is relatively simple. You can lower any capital gains taxes by deducting your capital losses to lower your tax bill. For example, let’s say you sold some Tesla stock (TLSA) or BTC for a net gain and some ether (ETH) for a net loss during the same calendar year. You could use your ETH losses to lower your TLSA or BTC capital gains taxes. You would also have the option to offset capital gains in future years if you carried these losses forward.

In some instances, you can also deduct capital losses from your income taxes. If you don’t have capital gains to offset a capital loss, you can deduct this loss from your income to lower your earned income amount and thus lower your income tax obligations. If you do have capital gains offsets, you can’t offset your earned income.

One of the most important things to know when it comes to harvesting crypto losses is that there is an upper limit to the amount you can harvest each year. At the time of writing, the amount you can write off for crypto losses is capped at $3,000 dollars per year. If you lost more than that, these losses can be rolled forward and applied up to the maximum amount until the total loss has been harvested.

You may have lost some — or all — of your crypto investments due to a hack, social engineering scam, or some other theft. According to the current tax code, these losses are treated as investment losses and not casualty losses. Complete losses in these circumstances would be treated as $0.00 proceeds transactions on Form 8949.

Whether you experienced the hardship of a hack or simply had to sell for a loss, it’s worth understanding how tax-loss harvesting strategies can be utilized to maximize your post-tax investment returns.

Reputable tax software, such as CryptoTaxCalculator, can tag stolen, lost or hacked assets and list them on your tax forms for you.

Cheat Sheet:
* Crypto investments sold for a net loss can be used to offset or lower your tax obligations through a process called tax-loss harvesting.
* The process for claiming crypto-related capital losses is the same process one would use to claim capital losses on stocks and other applicable investments.
* You can offset your losses by either offsetting your capital gains or through applicable income tax reductions.
* Annual capital losses are capped at $3,000 per annum. Losses over this annual amount can be rolled forward and applied to future years.
* Crypto lost as the result of a hack, scam, or theft can also be claimed as capital losses and are treated as investment losses.

Disclaimer: This crypto tax series is merely for informational purposes and should not be considered legal or tax advice. Please solicit the services of a crypto knowledgeable certified public accountant, tax professional, or lawyer should you need further guidance.

This article covers how crypto investments sold for a net loss can be used to offset or lower your tax obligations through a process called tax-loss harvesting. This process is the same process one would use to claim capital losses on stocks and other applicable investments. You can offset your losses by either offsetting your capital gains or through applicable income tax reductions. It is also important to know that annual capital losses are capped at $3,000 per annum, and that crypto lost as the result of a hack, scam, or theft can be claimed as capital losses and are treated as investment losses.

#CryptoTax #TaxLossHarvesting #TaxReturns #CryptoInvesting #TaxCode

You can read more about this topic here: Decrypt: Lose Crypto Last Year? There’s a Tax Upside to Your Downside

The post Turn Your Crypto Losses Into Tax Savings: Strategies to Maximize Your Tax Benefits first appeared on Byte Syze Crypto.

Crypto News

Cristiano Ronaldo Facing Billion-Dollar Lawsuit Over Binance NFT Promotion

Published

2 mins ago

December 1, 2023

A class action lawsuit filed in Florida on Thursday seeks over $1 billion in damages from international soccer star Cristiano Ronaldo for his role in promoting the cryptocurrency exchange Binance. The lawsuit alleges that Binance sold unregistered securities and operated illegally in the United States, claiming Ronaldo lent his celebrity to hype investments, driving traffic and investors to the platform. Attorneys for the plaintiffs believe compensation is the only path to justice for victims and that the law requires celebrities to disclose their compensation for promoting investments. The Securities and Exchange Commission filed charges against NBA Hall of Famer Paul Pierce earlier this year for violating the anti-touting and antifraud provisions of the federal securities laws. This story was drafted with Decrypt AI from sources referenced in the text, and fact-checked by Ozawa.

This lawsuit is bad news for Ronaldo as it seeks over $1 billion in damages. The plaintiffs argue that Ronaldo benefited financially from driving traffic to Binance and should have known his promotions were potentially illegal. The Securities and Exchange Commission has warned celebrities to disclose their compensation for promoting investments, making this a cautionary tale.

#CristianoRonaldo #Binance #Cryptocurrency #SEC

You can read more about this topic here: Decrypt: Cristiano Ronaldo Sued for $1 Billion Over Binance NFT Promotion

The post Cristiano Ronaldo Facing Billion-Dollar Lawsuit Over Binance NFT Promotion first appeared on Byte Syze Crypto.

Crypto News

“Meme Coin Implodes After Making Millions from Bitcoin Hater’s Death: Munger Was Right”

Published

2 hours ago

December 1, 2023

Prior to his passing Tuesday at age 99, former Berkshire Hathaway Vice Chairman Charlie Munger dismissed crypto as “worthless,” “no good,” “disgusting,” “evil,” and “massively stupid.” The Ethereum-based MUNGER token, which launched in the immediate aftermath of his death and quickly pumped some 31,000%, has since crashed 97.6% in value to a current valuation of $0.00000002856. The coin’s market capitalization has comparably plummeted to just over $18,000, with its liquidity evaporating to around $13,000. Market activity has also collapsed, with just $23,000 worth of MUNGER trading hands in the last 24-hour period. This volatile pump-and-dump action is common for meme coins, as seen with CZ token, which pumped 400,000% before collapsing 93%. It remains to be seen if meme coins inspired by the death of 100-year-old diplomat Henry Kissinger will follow the same trend. This news indicates that the value of crypto is highly volatile, with prices changing rapidly and without warning. #crypto #Munger #memecoins #volatility #HenryKissinger

The post “Meme Coin Implodes After Making Millions from Bitcoin Hater’s Death: Munger Was Right” first appeared on Byte Syze Crypto.

Crypto News

Unlock the Latest Xbox Game Pass Features – Decrypt

Published

3 hours ago

November 30, 2023

A total of 16 new games are coming to Microsoft’s Xbox Game Pass subscription service for standard and premium buyers in December 2023, while two are being added for “Core” subscribers—and four games are leaving Game Pass this month. Here’s a look at the latest releases and departures for Xbox Game Pass this December.

Chivalry 2 is the first-person multiplayer hack-and-slash sequel to Chivalry: Medieval Warfare. The sequel was released for Windows PCs, PlayStation 4 and 5 consoles, Xbox One, and Xbox Series S and X. It will arrive on Game Pass for all Game Pass subscribers, including Game Pass Core, on December 6.

Fallout 76: Atlantic City – Boardwalk Paradise is a new Fallout 76 expansion coming to Game Pass on its launch day, December 5, for both standard and premium tiers. Boardwalk Paradise builds upon the 2018 action RPG from Skyrim and Starfield developer Bethesda Game Studios.

Far Cry 6 is the latest installment of the Far Cry open-world game series and is coming to Xbox Game Pass on December 14. Set in a tropical world mired in political upheaval, players must join the local revolution in an effort to forever change their world.

Remnant: From the Ashes is a dark survival shooter set where players must fight and kill endless hordes of monsters. First released back in 2019, the game is now available for standard and premium Game Pass subscribers on cloud, console, and PC platforms.

Remnant 2 is the sequel to the third-person monster shooter Remnant: From the Ashes, and has also been added to Game Pass November 30. The sequel was first released earlier this year, and offers new villainous creatures to fight alongside your friends.

Against the Storm is a roguelike fantasy city-builder game that was released for Windows PCs back in 2021. In it, anthropomorphized animals like foxes, beavers, and lizards live together in a world alongside humans.

Clone Drone in the Danger Zone is a robot voxel beat-‘em-up game launched on Steam in July 2021—now, it’ll be added to Xbox Game Pass come December 5 for cloud, PC, and Xbox Series X and S gamers who are subscribed to the Game Pass standard and premium tiers.

Teamfight Tactics: Remix Rumble offers new characters and updates to the Portals and Augments in Riot Games’ 2019 autobattler game Teamfight Tactics. The new offering is now available for standard and premium Game Pass subscriber tiers.

World War Z: Aftermath is an expansion to the third-person cooperative zombie shooter game World War Z that was released on Steam in 2021. On December 5, standard and premium Game Pass subscribers will be able to play this zombie-slaying title.

For those looking for more, Spirit of the North and SteamWorld Build will join Game Pass December 1. Rise of the Tomb Raider and While the Iron’s Hot will be added December 5. Totally Reliable Delivery Service will be available December 6 for all Game Pass subscribers, plus core. Goat Simulator 3 will be added December 7, and Tin Hearts will be on Game Pass December 12.

While plenty of new games are coming to Xbox Game Pass this month , the following titles will no longer be included come December 15: Chained Echoes, Opus Magnum, Potion Craft: Alchemist Simulator, and Rubber Bandits.

Microsoft’s Xbox Game Pass is adding 16 new games and two for Core subscribers in December. Four games will be leaving the service this month. The new titles include Chivalry 2, Fallout 76: Atlantic City – Boardwalk Paradise, Far Cry 6, Remnant: From the Ashes, Remnant 2, Against the Storm, Clone Drone in the Danger Zone, Teamfight Tactics: Remix Rumble, World War Z: Aftermath, Spirit of the North, SteamWorld Build, Rise of the Tomb Raider, While the Iron’s Hot, Totally Reliable Delivery Service, Goat Simulator 3, and Tin Hearts.

This is good news for Xbox Game Pass subscribers as they will have more choices of games to play. #XboxGamePass #GamePass #DecemberGames #Microsoft #GameSubscription

You can read more about this topic here: Decrypt: Here’s What’s Coming to Xbox Game Pass

The post Unlock the Latest Xbox Game Pass Features – Decrypt first appeared on Byte Syze Crypto.