3 smart crypto tax moves to consider — whether prices go up or down

[Pelican Press 0]

This is the hidden content, please

• Sign In
• or
• Sign Up

3 smart crypto tax moves to consider — whether prices go up or down

CFOTO | Future Publishing | Getty Images

It’s nearly impossible to predict future cryptocurrency prices amid political and economic uncertainty — but you can still make some smart tax moves, experts say.

As investors brace for interest rate news from the Federal Reserve and weigh policy proposals from Former President Donald Trump, the price of bitcoin was at $65,856 around mid-day on Tuesday, while ether bitcoin was trading at $3,310.97, according to Coin Metrics. 

The price of bitcoin dipped to a two-month low in early July after the Fed indicated it wasn’t yet ready to cut interest rates.

More from Personal Finance:
Bitcoin is up more than 50% this year — here are key crypto tax rules every investor should know
Home insurance premiums rose 21% last year, partly due to climate change
The Fed’s interest rate cut is coming. What homeowners, buyers need to know

Whether prices move up or down, here are some key crypto tax strategies to consider, according to experts.  

1. Weigh ‘tax gain harvesting’

Despite

This is the hidden content, please

• Sign In
• or
• Sign Up

If you’re expecting a lower-income year for 2024, it could be a chance for tax gain harvesting, or strategically selling profitable crypto while in the 0% long-term capital gains bracket. Long-term capital gains rates apply to assets owned for more than one year.

These rates apply to your “taxable income,” which you calculate by subtracting the greater of the standard or itemized deductions from your adjusted ****** income.

“Tax gain harvesting is one of the best strategies,” to spread earnings across multiple years, according to Andrew Gordon, a tax attorney, certified public accountant and president of Gordon Law Group.

Of course, you’ll need to weigh the tax consequences of boosting your adjusted ****** income with crypto gains, which can impact other tax breaks.

2. Reset your purchase price

Harvesting gains and then immediately repurchasing could also be a chance to reset your “basis,” or the original purchase price of an asset, to reduce future taxes, experts say.

The strategy could make sense even at the 15% long-term capital gains bracket if you’re expecting higher income in the future and want to maintain your position, said Adam Markowitz, an enrolled agent at Luminary Tax Advisors in Windermere, Florida.

On top of capital gains, some investors also incur an

This is the hidden content, please

• Sign In
• or
• Sign Up

3. Consider the crypto wash ***** ‘loophole’

If you’re sitting on crypto losses, you could consider

This is the hidden content, please

• Sign In
• or
• Sign Up

This is the hidden content, please

• Sign In
• or
• Sign Up

by up to $3,000 per year.

Although tax-loss harvesting often happens at year-end, it’s better to harvest crypto losses over time because “those losses may no longer exist” by year-end, Gordon explained.

data:image/gif;base64,R0lGODlhAQABAIAAAAAAAP///ywAAAAAAQABAAACAUwAOw==

Typically, investors are subject to the wash ***** rule, which blocks you from claiming the tax break if you repurchase a “substantially identical” asset within a 30-day window before or after the *****.

However, the wash-***** rule currently doesn’t apply to cryptocurrency, meaning you could harvest losses and immediately repurchase to maintain your position.

The IRS gives us this loophole. We may as well take it.

Adam Markowitz

Enrolled agent at Luminary Tax Advisors

“The IRS gives us this loophole,” Markowitz said. “We may as well take it.” 

While previous Congressional efforts to repeal the crypto wash ***** rule have *******, changes could still happen.

Without action from Congress, trillions of tax breaks enacted by Trump will expire after 2025. The crypto wash ***** rule could be revisited as lawmakers seek funding to extend key provisions, experts say.

“It may make sense to utilize it now before it goes away,” Gordon added.

This is the hidden content, please

• Sign In
• or
• Sign Up

#smart #crypto #tax #moves #prices

This is the hidden content, please

• Sign In
• or
• Sign Up

This is the hidden content, please

• Sign In
• or
• Sign Up