How Active Cryptocurrency Traders Can Save On Their US TaxesApril 21, 2018
Today, a huge number of U.S cryptocurrency traders are facing tax trap. Although most of the traders earned massive gains during the previous year, still they don’t manage to pay their owed taxes for the year 2017. During the last first quarter just this year, most of their crypto portfolio has declined in value.
Now, numerous traders need to sell their cryptocurrencies just to raise funds to pay their 2017 tax liabilities by 17th of April this year. This will leave most of the taxpayers to continue trading. They may also continue to choose an automatic extension without paying a small amount and incur a penalty of 0.5 percent every month.
If users fail to file their extensions by April 17, the IRS will charge a penalty of 5 percent to the amount due for every single month. The maximum penalty given by the IRS is 25%. When the tax trap gets worse, most of these traders will be affected this 2018. Many of them might have substantial losses this year and will get stuck with their $3,000 capital loss. Most of these traders feel that it is quite unfair to pay their taxes for the year 2017 without an immediate tax relief for their new losses.
Active cryptocurrency traders can now settle their tax traps in a variety of safer strategies and can also be used to eliminate their bills. For starters, traders can deduct their office expenses and trading business if they qualify for the tax status. The trader tax status (TTS) is a salient factor for the year 2018. A signed law by the US President, Donald Trump, the Tax Cuts and Job Acts, last December shows that suspended IRS and investment expenses do not allow employees’ benefit plan presumptions on their investment incomes.
With what Section 475 states, there is an additional tax benefit. For most crypto traders, the word “potential” is often stressed. Active cryptocurrency traders can also benefit from the section 475. The tax law creates a 20% deduction on the chosen qualified business income that includes an ordinary income. However, this excludes the capital gains.
There will be a great possiblty that the IRS will change its tune just to treat the cryptocurrency as a commodity. The IRS has an important task to do in creating regulations in order to implement tax law and provide the law its limited resources. Most of the American crypto traders who face a substantial loss during the previous year and they qualify for the TTS, they might want to consider in creating a secure commodity by 17th of April.
According to reports, there are many American traders who are still facing tax traps as of the moment. Experts also suggest most of these traders settle their due by April 17, 2018, to avoid all the possible penalty rates and other negative consequences.