Cryptocurrency Tax Rates: Everything You Need to Know
Tax Rates in the US
In the United States, the cryptocurrency tax rate for federal taxes is the same as the capital gains tax rate. This means that if you sell cryptocurrency for a profit, you will need to pay taxes on the capital gains. The capital gains tax rate depends on your income and filing status, but it can range from 0% to 20%. If you hold cryptocurrency for more than a year before selling it, you will be eligible for the long-term capital gains tax rate, which is lower than the short-term capital gains tax rate. You will be eligible for the short-term capital gains tax rate if you hold cryptocurrency for a year or less before selling it.
Amending Your Taxes
If you did not report cryptocurrency on your taxes last year, you can amend your return to include the correct information. To amend your tax return, you will need to file Form 1040X, Amended US Individual Income Tax Return. You can find Form 1040X on the IRS website. When you file Form 1040X, you will need to include a copy of your original tax return and any supporting documentation that shows your cryptocurrency transactions. You can also amend your state tax return if you live in a state that taxes cryptocurrency.
Taxation for 2017-2019
If you are still in the process of finalizing your cryptocurrency taxes for 2017-2019, there are a few things you need to know. First, you will need to determine your cost basis for each cryptocurrency transaction. Your cost basis is the amount of money you paid for the cryptocurrency, plus any fees or commissions you paid. Once you have determined your cost basis, you will need to calculate your capital gains or losses. To calculate your capital gains, you will need to subtract your cost basis from the sale price of the cryptocurrency. If the sale price is greater than your cost basis, you have a capital gain. If the sale price is less than your cost basis, you have a capital loss.
Conclusion
Cryptocurrency taxation is a complex topic, but it is important to understand the rules so that you can file your taxes correctly. If you have any questions about cryptocurrency taxation, you should consult with a tax professional.
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