This guide tells you everything from how crypto taxes work, to the types of crypto portfolios. In order to make informed decisions when it comes to your crypto portfolio, you need to understand how taxes work because they will come into play as we add gains or losses to our portfolio. Taxes are complicated and the government is not known for making it easier to understand. There are a few different ways you can pay taxes on your crypto portfolio. We have made it our goal to make things as easy as possible for you. There is a lot of information available on the internet and we wanted to find a middle ground of useful information that was easy to understand and did not get lost in a sea of information.
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Guide to crypto tax & portfolio management :
1. Taxation on your gains :
Taxes on your gains on your crypto portfolio vary depending on several factors if you are trading crypto to crypto or trading crypto to fiat. When you trade crypto to crypto you are not taxed because it is an exchange and assets are being sold between two wallets. When you trade crypto to fiat, you are taxed on the gains. When you purchase crypto with fiat, you are taxed on the fiat amount.
2. Trading to fiat :
If you purchase crypto with fiat, then it is taxable. It is important to note that if it is held long enough and the exchange rate drops, you may end up paying zero taxes on your profits because they are subjectively considered capital gains. This also depends on your country’s rules and laws as well as whether or not they have tax treaties with other countries that may give a boost to their tax revenue.
3. Taxation on your crypto portfolios :
It is important to look at both the gains and losses of your portfolio when it comes to determining our taxes. You need to understand the different types of gains and losses in order to know how they will affect your taxes. There are several types of gains and losses when it comes to crypto that you will need to keep track of. The most common type of gains and losses will be realised capital gains and losses.
4. Figuring out how much you owe :
There are a few different ways to figure out how much you owe on your crypto wallet tax. The simple way is to just add up all of your gains and losses and use that as your basis for taxes owed. If you want to take it a step further though, then you can determine the exact amount of taxes based on capital gains tabulations and income. Remember that it does not matter if you are using crypto to crypto or crypto to fiat when calculating capital gains.
5. Determining your exact taxes owed :
Since crypto taxes are not as clear cut as they are with traditional assets and crypto, we wanted to put together a comprehensive guide for you on how to determine your exact crypto taxes owed. You will learn how to determine the types of gains and losses, how to calculate your taxes owed and what you need to do in order to make sure that you have the most accurate means of calculating your tax obligations.
Binocs is a crypto portfolio management platform that helps crypto investors grow their crypto portfolios. Our platform is designed as tax crypto software to help investors manage their crypto portfolios so that they can invest with confidence. We simplify the complex world of crypto investing by streamlining the process of planning, tracking, and analysing.