So permit me get this directly…
The manner I see it, hobby from Earn/Staking is pretty just like a dividend and can be taxed at your earned earnings tax fee every year.
I reinvest that crypto returned into Earn/Staking and accumulate greater taxes on that interest.
Rinse and repeat and years later I even have a giant account I want to draw down on. As I promote, I pay capital gains taxes with a purpose to be zero-20% with the percentage relying on the quantity I sell.
I'm positive some nation taxes are thrown in there as well for earned profits taxes and capital profits taxes.
Anyone have any experience with this to allow me realize if I'm on the proper tune with my understanding?
Side query: if there are no taxes in the Cayman Islands, why doesn't anybody move there? 😂
Edit: nevermind on Cayman Islands. That vicinity is pricey as hell😂
Obviously you must talk to a tax accountant and now not ask the net, however sure crypto in earn is considered earned profits and taxed at the best price. Selling is first in first out, if you hold over a year you’re paying the long time capital profits price, less than a year the quick time period fee. Completely relies upon to your nation what the additional taxes could be, I hope you don't live in California.
Selling is first in first out,
Selling is however you want it. Fifo, filo, precise ID, some thing.
CPA can be a given come tax time. Just seeking to get a general concept of what I'm in for.
I'm in Cali. I'm guessing the taxes may be brutal?
Selling is first in first out
In the U.S. we have options for calculating fee basis for digital currencies: FIFO or specific devices. See Virtual Currency FAQ Q39 and Q40. Specific devices has some blessings over FIFO however it's a lot harder to tune.
Current IRS directives can be clear as mud at instances…and they could trade in some years hence your state of affairs may exchange…however as far as commonplace information, you are correct.
Staking rewards are like a dividend and you will owe taxes because it's taken into consideration income. This would be at your contemporary tax bracket. Anywhere from 0%-39%.
Once you sell, then you definitely would owe taxes on capital gains.
For this work, you want to hold statistics of dates, value of Earn at time of Earn, and sell dates and values. I suppose a few softwares can calculate this for you.
I think you need to pay income tax on the choices interest earned from earn/stake regardless of whether or not you promote that crypto or not as you already earned it while it’s far credited in your account (fee is when it is credited on your account). Once it is credited, it’s far as much as you to hold it or promote it. If you hold it, any further profits you’re making will incur brief time period or long time capital profits tax depending on how lengthy you preserve that earned crypto. Or you could claim losses if the cost goes down after it’s miles credited on your account.
I’m dreading how to calculate all this . . I know I in all likelihood need to have saved a document of each unmarried crypto action I’ve executed, and at this factor I actually have achieved quiet of bit of it . . Can I fud it a touch? Like how are they purported to music if I can’t even? Do I just have to move back and manually tune each flow and calculate gains and losses of every little CRO? That doesn’t genuinely seem reasonable? Granted, I am exceptionally new to the tax sport given than I’ve been in faculty for ten years and easy taxes earlier than crypto.
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Can you offer a link?