This past week we released our interview with Zac McClure from TokenTax titled, “Automating Crypto Taxes And Harvesting Losses”. Zac is a true professional when it comes to crypto tax laws and understands this part of the business inside and out.
We took an 8 minute clip from the interview where Zac breaks down crypto tax basics and some common misconceptions people have about crypto tax laws.
Below is a list of the main points in this crypto tax basics video:
- If you only trade fiat to crypto and have unrealized gains or losses, those trades are not taxable events.
- If you trade back to fiat or for another crypto then that is a taxable event and must be reported. For example, trading on Binance requires a crypto to crypto trade. Each trade has both a buy and sell value.
- Taxable events include selling crypto for fiat, exchanging crypto for crypto, spending crypto on goods and services, and paying someone in crypto.
- Taxable events that must be reported as income include mining crypto and being paid in crypto. Staking crypto is still a grey area until we get more guidance from tax authorities.
- Currently, airdrops are taxed based on the value at the time you receive it.
- Investing losses do not roll backwards. Losses can be used to offset future capital gains.
- You can only use $3000 of crypto losses every year. Losses that exceed $3000 can be used in future years.
- Crypto tax rules differ depending on jurisdiction.
For more information of crypto taxes you can visit TokenTax and ask them any questions you have.
Obviously nothing in this article is meant to be investing or tax advice. Please consult a tax professional in your jurisdiction for the correct laws.