How Is Cryptocurrency Taxed? | Binance Academy - Deepstash

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How Is Cryptocurrency Taxed? | Binance Academy

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Do I have to pay taxes when I buy or sell crypto?

  • Your taxes will depend on your location, how long you've held your crypto, the type of activity you're doing, and other factors. 
  • In general, you'll probably need to pay taxes or offset losses for selling but not when you buy.
  • As a fairly new...

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In many countries, cryptocurrencies are subject to tax.

  • Trading, spending or selling your crypto are often taxable events. 
  • To calculate your taxes, you will need to consider your capital gains and losses. 
  • You may also have to pay income taxes if you r...

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A taxable event is a transaction or activity you're required to pay taxes on.

  • A taxable event in one country might not be one in another. 
  • Typically, transactions involving the sale of commodities, investments, and other capital assets are all taxable. 
  • Selling or tradi...

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What are taxable and non-taxable events?

Generally speaking, taxable events include:

  1. Selling cryptocurrency for fiat
  2. Trading cryptocurrency for another cryptocurrency (e.g., BTC for E...

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  1. Buying cryptocurrency with fiat currency (except in cases where the purchase price is lower than the fair market value of the purchased coin).
  2. Donating cryptocurrency.
  3. Gifting cryptocurrency under a specific limit.
  4. Transferring cryptocurrency from one wallet you own t...

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If you've bought crypto, HODLed, and sold it later, your tax liability should be fairly easy to calculate. Let's look at a simplified, US-based example. 

Here's the formula:

  • Fair market value - Cost basis = Capital gain / Loss
  • The...

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  • Tax authorities such as the IRS, ATO, CRA, HMRC, and others track cryptocurrency transactions and enforce tax compliance. 
  • Large cr...

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In many countries, tax authorities require you to file your taxes regularly. 

This can be the case even if you owe zero taxes or need a refund. Failure to file can result in fees, penalties, interest, confiscated refunds, audits.

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Getting your taxes right is essential. 

  • That’s why it's recommended to get professional help calculating your tax bill if you have any doubts. This may be the case if you’ve been trading and not just investing. 
  • The tax implications of regular trading are much more complicated....

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