Cryptocurrencies have become a popular and lucrative form of
investment for many people around the world. However, they also come with tax
implications that vary depending on the jurisdiction and the type of crypto
activity undertaken. Here, we’re going to explore how to avoid unnecessary taxes and how to remain compliant in your country.
One of the simplest ways to avoid paying
taxes on your crypto gains is to hold your crypto for more than a year before
selling or exchanging it. This is because most countries treat cryptocurrencies
as capital assets, and apply different tax rates depending on how long you hold
them.
In the US, if you hold your crypto for more
than a year, you will pay long-term capital gains tax, which ranges from 0% to
20%, depending on your income level. However, if you hold your crypto for
less than a year, you will pay short-term capital gains tax, which is the same
as your ordinary income tax rate, which can go up to 37%.
By holding your crypto for more than a year, you can
significantly reduce your tax liability. However, this method also has some
drawbacks. First, you will have to deal with the volatility
