Coinbase Twitter Shares Crypto Tax Guide
Coinbase Twitter tweeted a link to the article titled “The crypto guide to taxes” in the last days of March 2022.
The tweet came a few weeks to tax season 2022 in the United States of America, and with the deadline for submitting personal gains to the Internal Revenue Service (IRS) fast approaching.
Coinbase tweets towards the end of March were on blockchain analytics, promotions for new accounts, and advanced trading on the cryptocurrency exchange.
For Coinbase Twitter news to focus on crypto taxes means representatives of the platform continue to get messages from account holders on what activities constitute paying cryptocurrency taxes.
Coinbase Twitter Reminder
Coinbase users have a cause to worry about Coinbase taxes. This is the primary reason why it is not surprising to find millions of verified Coinbase users asking the question of which crypto transactions are taxable?
According to Coinbase, numerous kinds of crypto transactions are considered taxable events. Several crypto activities are taxable, but some of them are not.
When you sell and convert crypto, you should know that you must pay crypto capital gains tax.
With that said, activities such as mining and holding digital collectibles in the form of non-fungible tokens (NFTs) and buying and holding crypto are non-taxable events.
Therefore, if you know that you have staked, spent, converted, sold, and earned crypto, you should prepare to pay taxes on cryptocurrency gains. Taxes on personal income come in different rates and brackets, and the cryptocurrency tax is the same. Cryptocurrency tax rates fall under ordinary income or capital gains.
The rate of token tax depends on factors such as the method of obtaining the crypto and the duration you held onto the digital coins. IRS crypto taxes is similar to paying taxes on stocks. Therefore, you will pay relatively lower rates if you decide to HODL (hold onto your tokens for at least one year before selling them).
You will pay taxes on crypto if you are involved in swapping tokens. A great example is trading crypto pairs such as BTC for ETH, ETH for ADA, ADA for BNB, and others. In the eyes of the IRS, swapping means you have sold your Bitcoin to buy Ethereum, Ethereum to buy Cardano, and Cardano to buy Binance Coin. In such a situation, you will realize gains or losses.
The same holds for spending. For example, you buy $20,000 worth of ETH and a price spike increases your investment by 300% to $80,000. You use your ETH to buy an automobile worth $80,000. You are then subject to paying capital gains tax on cryptocurrency.
The only way to avoid paying taxes on crypto is to use good old cash. Although it is not impossible, it would be difficult to find an exchange that accepts cash as a payment method in the current climate of crypto regulation. To put it simply, buying crypto with cash is not taxable, so you would not be having any IRS crypto problems once tax season takes center stage.
If you are a trader who transfers digital currencies between wallets such as Coinbase wallets (non-custodial wallet) and Coinbase Exchange accounts (custodial wallet), you are not subject to reporting detailed activities of such transfers.
Suppose you sent no more than $15,000-worth of crypto to friends and acquaintances. In that case, you are not eligible to file taxes on cryptocurrency.
Reporting your crypto activities and paying the necessary crypto trader tax is imperative.
The IRS has a zero-tolerance policy when it comes to paying taxes. Failure to adhere to crypto and taxes rules could lead to steep penalties. You can use CoinTracker (a trusted aggregator for tax services) to help you sort out your taxable crypto activities.
Although Coinbase Twitter news has done its part in shedding more light on crypto and taxes, the onus falls on you, as a crypto user, to make arrangements for capital gains on cryptocurrency.
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Author: Raphael Darkwah
Raphael Darkwah/ Albert Zuhnden (preferred pen name) is a crypto finance expert who has covered several projects since taking a stake in Bitcoin in 2016. He has covered NFTs, decentralized finance, decentralized cloud storage networks, stablecoins, and several blockchain projects. He believes blockchain technology could revolutionize the world of work and money.