For most crypto investors 2022 is a year of forgetting. However, filing tax returns for crypto before December 31st remains a daunting task. Many crypto investors are concerned about unrealized investment losses. However, failure to report cryptocurrency transactions and assets on tax returns could lead to a fine from the IRS.
Tax platform Accointing from Glassnode provides an easy way to import and review crypto transactions, and then fill in your tax returns in just a few clicks. Additionally, investors can reduce the amount they owe in taxes by using its tax loss harvesting tool.
How to optimize your cryptocurrency tax return
In 2022, most cryptocurrency assets, particularly Bitcoin, saw significant price erosion. Some crypto investors may feel tempted to reduce their taxes by underreporting their income. However, such a strategy will always result in punitive action being taken by the IRS. US crypto investors should be familiar with all tax provisions in order to maximize their tax liability.
Let’s suppose that losses from the sale of crypto assets are significantly higher than capital gains from the sale of profitable positions. Investors may then be able to deduct $3,000 from their income and carry over any losses to the following accounting year. This excess can then offset capital gains arising in subsequent years.
Investors may also be able to sell digital assets at a discount relative to their acquisition costs and then buy them again later in the year. While the IRS exempts stocks and securities from this tax-saving technique, crypto assets are not. Realized losses can be used as a way to offset capital gains taxes and allow investors to retain their net holdings.
How crypto tax loss harvesting can reduce your tax bill
If an investor has made a net gain from all crypto transactions within a year, any positions that have suffered a loss equal to the capital gains can be sold. These losses can offset some of the capital gains, which will reduce the overall tax sum. Tax loss harvesting is the name for this method. Tax loss harvesting, contrary to popular belief, is not the same thing as realizing your losses. It involves many calculations.
The most difficult tasks are to identify which crypto assets should be sold and calculate the amount of loss. Positions sold within 365 calendar days are subject to short-term capital gains taxes while positions held for more than a year will be treated as long-term capital gains.
Accointing‘s crypto tax calculator can be reached by saying “Hello”.
Many of the crypto tax calculator vendors on the market charge a monthly fee, which makes these tools inaccessible to retail crypto investors.
Accointing’s portfolio tracking solution and compliance software can help the U.S. crypto investor community of 27 million. The comprehensive crypto tax calculation is free and available until December 31, 2022. This calculator will tell you how much tax you can save this year.
The Tax Loss Harvesting tool allows investors the ability to quickly review which tokens to sell to offset any capital gains. It makes tax loss harvesting easy. Accointing’s tax calculator generates reports for portfolios that contain up to 50,000 transactions.
Accointing’s crypto-tax software can help crypto investors save a lot of time and optimize their tax returns. Accointing, which was acquired in October 2022 by Glassnode on-chain intelligence provider, will provide its users with the combined investment intelligence insight provided by both companies.
