Protect Your Gains in 2021 (BEST Plan for Crypto Taxes)

Imagine the year is 2022. Your friends are all out doing things
they love and having fun. You got a ton of money in your bank accounts. Yes, plural. You're married to a supermodel. You never even thought you'd get a girlfriend! One lovely morning, you wake up. You slowly make your way down your
wraparound staircase, and then, all of a sudden, you hear a knock at your door. You wonder, "Who could this be knocking
on my door at 9AM in the morning?" You didn't even order Uber Eats
from Starbucks. You open the door. It's two men in suits. And they've got badges with the letters I-R-S written right across them. One of them looks you dead in the eye. You can smell their morning breath
from too much coffee.

He says to you, "We're here to talk to you about
some unpaid crypto taxes." The fear is real. Tax mistakes and underreporting happen. And today, we're going to talk about some
of the most important crypto tax laws to keep you out of this situation. Let's get it! BitSwap is the hottest new way to trade tokens. Crawling all the top decentralized exchanges, BitSwap gets you the very best price and value for your trades. BitSwap is changing the game. Try it now at bitswapdex.io. Welcome to BitBoy Crypto!
The largest crypto channel in all the Interwebs. My name is Ben. Everyday, I show you how to make money in cryptocurrency. If you like money and crypto,
and you want to keep it, make sure to hit that subscribe button.

If you want more info on taxes,
make sure to smash that like button so we know to give you
more of this kind of content. One crypto tax site though that we love is TaxBit. You can check out TaxBit and get 10% off
by visiting bitboycrypto.com/deals and scrolling to the bottom of the page. In this video, we're going to take a look at some of the most
important crypto laws out there regarding taxes. We're going to help you avoid any
sort of penalty from underreporting or giveaways from overreporting. One of the first things that you should
know about crypto tax laws before you get that knock at your door is that the United States government
looks at crypto as a property.

In other words, crypto is seen by the US government
as a store of value and a means of trade. It's been decreed by the Internal Revenue Service
that crypto is neither currency nor securities. They're belongings. You probably didn't even know
that was a classification. It's more like a shopping center than a hundred bill. Bitcoin and other rival cryptos can give rise to
capital gains and losses as capital assets when disposed of. For capital gains tax, the taxation level
will vary depending on whether or not you hold the crypto for less than
a year or more than a year.

For long-term capital gains, when you hold crypto for longer than a year,
you can get your tax rate to be 15% or lower. However, for short-term capital gains tax,
you have to pay as if it's ordinary income, which will be up to 37%
depending on your income level. Second, crypto exchanges
have the right to report you. That's right, US-based coin exchanges file data
returns on clients with a certain number of trades. It's over 200 trades, which is much
easier to get to than you may think. The 1099-K is required for a customer
who makes at least 200 purchases, proceeds totaling at least $20,000
in one calendar year.

For other intermediaries managing
property sales like eBay, this is the same cutoff. Some states have thresholds that are lower. 1099-K form is rather like the 1099-B
that stockbrokers register, except there's no 200 trade minimum
for the latter form, and the K probably won't tell you
whether a coin was your cost basis. The fact that you did not get the form because maybe
you did not do a lot of trading or for whatever reason does not absolve you from the duty to report all
sales and other requirements as with 1099-B's and so is with the K's. Before you get that knock at the door
from the boys in blue, we have a few more crypto regulations
I want to talk to you about.

This next one is really important. Before I talk to you about it, I want to talk
to you about my friends over at TaxBit. These guys are funded by
Coinbase Ventures and Gemini Capital. And they can help you take care of organizing your
crypto taxes and making sure everything is unified. If you want to sign up for TaxBit
and get 10% off your plan, you can do that by going to bitboycrypto.com/deals,
scrolling to the bottom of the page, clicking the link.

But the third major point to consider
when it comes to crypto taxation is what events count as taxable transactions. There are three really important crypto tax events. When crypto is sold for cash, when crypto is traded or exchanged
for another crypto, or when you use crypto to buy something. Let's break down these three
taxable events a little more. When you sell crypto for cash, that's not just literally selling it for cash
from a shady guy at a crypto conference. It's when you have a liquidity event and send
your crypto to USD on a platform like Coinbase. Whenever the crypto position is sold for USD,
that is the event that must be reported.

Again, crypto has to be taxed
when it's traded for another crypto. For example, if you bought into Ethereum in November
when it was going for less than $400 per ETH, and then you traded all of your newly
found gained ETH for some LOOP, then you would have to report that trade. That's right, when you move crypto
from one token to another, you have to tell good ol' Uncle Sam. The third taxable transaction is when
you use your Bitcoin to buy something. Of course, there aren't as many platforms
that do this as we probably like, but even in this day and age, we already
are able to buy property with Bitcoin. When you buy a home using Bitcoin, you will most definitely have to report that
as a taxable transaction. That goes for anything though. Even if you use Bitcoin to pay for your Shopify bill,
you technically still need to report that. However, two more commonly known events
that do not qualify as taxable transactions include transferring coins between wallets
as well as HODLing.

That's right, if you buy and hold a cryptocurrency,
you don't have to report taxes on it. The IRS Grim Reaper is moving further and further
away from your door as this video goes on. Another kind of transaction that's
quite interesting is airdrops. Do you know that airdrops can
count as ordinary income? In the context of a marketing campaign,
airdrops are the random distribution of coins. With slightly more justification than taxing forks, the IRS considers ordinary revenue
to be a marketing giveaway. As soon as you get the freebie,
you announce the profits from a marketing scheme. Yes, sadly, airdrops aren't as fun as they sound. More like airdrop your crypto profits to Uncle Sam. Yes, if you later dispose of the coins,
the reported revenue becomes the cost base. It is likely that the dollar sum would be small. People don't give away valuable coins. Next, let's talk about mining and taxes. Alright, suppose you enter a mining pool. You spent $32,000 on equipment,
electricity or whatever expenses.

Then you get rewarded with $39,200 worth of Bitcoin. If you don't sell a coin,
a profit of $7,200 has to be registered. That profit is ordinary revenue. If you're mining with the intention of making money,
the profit and loss listed here applies. If on the other hand, the IRS will approve that
your mining is nothing more than a hobby, then you get stuck with accounting for your hobby. This is a tragedy. Hobbyists needed to clear all their profit and sales,
but they cannot subtract any of their expenditures. Guys, look, if any of this sounds confusing, I'm not a tax expert. You should definitely consult with an accountant
before you do your taxes this year. I strongly advise you consult with one, or, of course, you can check out TaxBit
like we mentioned earlier in the video on bitboycrypto.com/deals. If you're unaware, TaxBit is backed by some of
the leading venture capitalists in the space like Coinbase Ventures and Winklevoss Capital.

Whether you need to issue a 1099 or you're a user
on an exchange that needs to report your taxes, they can help you unify all your crypto stuff
in one place and you get 10% off. But what do you think about crypto taxes? Are you nervous? You shouldn't be. As long as you aren't intentionally
hiding things from Uncle Sam, you'll most likely be fine. I'm a strong advocate that believes
you definitely should pay your taxes. We may not like it, but you definitely don't want to get
your gains taken later down the road.

Drop your comments on that down
below in the comments section. That's all I got. Be blessed. BitBoy out..

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