There are a bewildering number of ways to pay taxes on cryptocurrency, but only one is easy. If you own a crypto portfolio which contains different crypto currencies then calculating and filing tax will be a very difficult job for you. In this blog we will talk about how to pay taxes on cryptocurrency.
Methods To Pay Crypto Tax :
Cryptocurrency has it tough when it comes to taxation. On the one hand, there are many different methods by which you can pay your crypto-based income taxes (aside from declaring a gain on any sales or purchases), but on the other hand, all of these methods will ultimately turn into more work for you just as you’re beginning to enjoy your investment and start enjoying life.
Of course, we don’t want anyone in crypto becoming discouraged and giving up altogether. We have to find ways to pay crypto taxes without giving up the freedom and liberty that crypto can provide.
Let’s look at some of the most widely used methods by which you can pay crypto taxes, so you know what you’ve got to face down the road.
The Easiest Way To Pay Taxes On Crypto?
From a taxation standpoint, the easiest way to pay your crypto taxes is simply to sell some of the coins available in your crypto portfolio and give the government their due. Some people will react negatively to this idea, as it means giving up an investment that’s been performing well for them (and which they were probably excited about).
Nevertheless, this is one of the easiest ways to pay crypto taxes that’s out there. You can sell coins into USDT, BTC, ETH or any other currency that comes with relatively low fees and low enough volatility that it won’t cost you most of your gains in trading fees. Once your money is converted over to fiat, things get a lot easier on you although you still have to deal with the tax ramifications of actually taking such profits.
Pay Crypto Taxes By Making Purchases
Another method to pay crypto taxes is to purchase something with your crypto that you need or want. If the government decides to penalise you for making cash purchases in crypto (which they’ve been talking about doing), then you’ll want to get ready.
For example, let’s say that you need a new car but don’t have the money for it. So, you decide to pay for it with crypto instead of fiat (or a loan). There’s really not much the government can do about it: After all, in theory, at least, there is absolutely nothing wrong with a person paying for something with whatever currency he has available and wants to use.
Of course, the government would like to stop this practice, and according to some, they may even be able to do so. However, it will take a serious legislative change in order for this to happen and that’s unlikely. Nevertheless, don’t expect the ease of paying crypto taxes with purchases (such as car purchases) to go away any time soon.
If you are looking for an automatic way of filing your crypto tax then, I will suggest you to use Binocs. Binocs provides the automatic calculation and filing of tax on the date of the taxation in your region. You can rely on Binocs, I have tested this personally and it has performed so well in taxation of cryptocurrencies.
Also Read: How to Earn Passive Income with Crypto
