Full Time Profitable Cryptocurrency Traders May Not Owe Any Taxes on Gains or File Any Returns
It seems that individuals that have no other income besides cryptocurrencies may not have to file a tax return.
According to Crypto Tax Girl, a crypto tax advisor on Twitter explained that users may not have to file tax returns for 2018.
Crypto Users Might not Have to File Tax Returns
According to Crypto Tax Girl, she talked with a few clients that do not have other income besides crypto. She said that as long as the taxable income from long-term gains is under $38,600 (single) or $77,200 (married) then, users would not have to file a tax return.
I've talked to a few clients lately who have no other income besides crypto, and if this applies to you, then as long as your taxable income from long-term gains is under $38,600 (single) or $77,200 (married) then you will not owe any tax and don't need to file a tax return.
— Crypto Tax Girl (@CryptoTaxGirl) March 11, 2019
Nonetheless, she said that if there are users that have short-term gains or other taxable income, this rule does not apply.
This loophole related to crypto taxes might be related to long-term capital gains and measures taken in the past. She explained that cryptocurrencies that were stored for more than a year are considered to be long-term gains, thus increasing the minimum amount of taxes to be filed.
Cryptocurrencies that have been stored for a period smaller than a year are referred to as short-term gains/losses. Thus, single individuals would have to pay taxes for gains over $12,000. Meanwhile, married investors would have to pay taxes from profits over $24,000.
Thus, users must have their tokens for more than a year. It is worth mentioning that each state has a different tax regulation. That means that the loophole does not apply to tax filings in all states.
Moreover, the loophole works for those that have cryptocurrencies as their only source of income. Those individuals that earn funds in other way have to submit tax returns as well.
Nonetheless, taxpayers may want to file a return just to maintain a record with the Internal Revenue Service (IRS). If individuals are audited, there might be necessary a careful personal accounting to prove the gains were below the threshold.
Users could just take the decision to live with small amounts of funds. They can sell small parts of their savings in digital assets that have been stored for more than a year and live under the taxable threshold. However, users should always request help from specialists to file their taxes.