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Author: Admin | 2025-04-28
Everyone who has been avoiding their crypto taxes in the US. The last thing you would want is a crypto tax audit. Plus, most, if not all, exchanges in the US report to the IRS, meaning the IRS can identify and track your transactions and find out if you’re avoiding taxes. Tax evasions have severe consequences, from hefty penalties to criminal prosecution. So, you should pay your taxes accurately and honestly.Although you can’t entirely avoid all your crypto taxes, there are some strategies you can use to reduce them. Firstly, utilize the tax breaks that the government provides. Long-term capital gains tax rates are far less than short-term capital gains tax rates. Plus, if your total income, including your crypto gains, is less than $41,675 (in 2022), you’ll pay no capital gains tax on long-term gains. So, focus on HODLing your crypto assets, or at least wait a year before selling them. Of course, none of this applies if you’re a day trader or swing trader. You can also utilize crypto gifts and donations. As we discussed, gifting and receiving crypto is tax-free in the US. So, you can gift crypto to your spouse and reduce your tax liability while keeping the crypto within the family. Or you can donate crypto to a registered charity to deduct from your taxable income. Utilize tax-loss harvesting and the absence of the wash sale rule in crypto. Tax-loss harvesting is when you purposefully sell assets sitting at a loss to harvest losses that you can use to offset gains and reduce your tax bill. In most cases, the wash sales rule prevents taxpayers from selling an asset, realizing a loss and quickly buying it back.In the US, however, the wash sale rule doesn’t apply to crypto. This is a huge loophole in the taxation law that you can utilize for now, but probably, not for long. Check out our detailed guide on crypto wash sales rules to know more.Consider putting your crypto assets in crypto IRAs and crypto charitable remainder trust to receive more tax benefits and deductions. Lastly, you can consult a tax professional who can customize a strategy tailored to your unique situation. How to Report Crypto Taxes in the USThe financial year in the US runs from 1st January to 31st December. The tax deadline for reporting your gains, losses and income is usually 15th April. However, for the financial
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