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Guide to paying taxes on cryptocurrency income

Published

2 months ago

September 20, 2024

Disclosure: This article does not represent investment advice. The content and materials featured on this page are for educational purposes only.

Many misunderstand crypto, thinking its anonymity hides them from the IRS. In reality, crypto income is taxable. Here’s a guide on how to pay in 2024.

A lot of people still have misconceptions about the way cryptocurrency works. They’ve heard that cryptos provide anonymity, which makes them develop a false assumption that not even the IRS will be able to track the amount of cryptocurrency income they receive.

This, however, is false. Not only do you have to pay taxes on your crypto income, but you also have to follow a strict procedure. Here’s how you can pay taxes on your crypto income in 2024.

Understand taxable events

The first thing you need to understand is the taxable events in question. There are many different ways to earn crypto income, and identifying some of these events will help you establish the correct procedures for making these payments.

Trading cryptocurrency

Selling one cryptocurrency and buying another is taxable. This is important because there are new promising cryptocurrencies every day, and keeping track of this is often far from easy. According to crypto expert Michael Graw, most people are interested in the potential for high profits, while some are even motivated by the promise of early investments.

Most importantly, every time a person makes a trade, they have to report the fair market value of the cryptocurrency received. This is a huge obligation that a lot of crypto traders neglect.

Purchasing goods and services

Cryptocurrencies can be used to buy goods or pay for services. In the majority of countries, states, and jurisdictions, this is susceptible to taxation; however, it’s a lot harder to determine this tax when it’s crypto that we’re talking about.

The bottom line is that the customer has the exact time of the transaction, and during the reporting process, they have to report the fair market value of the cryptocurrency that was used in the transaction. To some, this may seem as simple as just stating the price in their fiat currency, but it often ends up being slightly more complex.

Selling cryptocurrency

Every time cryptocurrency is sold for fiat currency (like USD or EUR), this is considered a taxable event. In this event, capital gains and capital losses have to be reported. Now, this is basically just a more standard form of the taxable event we’ve described when we talked about trading cryptocurrencies.

The bottom line is that this is, more or less, always the end goal when crypto trading. Crypto adoptions are still not as great as someone will be able to use it for all your acquisitions. In other words, eventually, trading them for fiat is what people are looking for. Keep this in mind before doing so.

Mining cryptocurrency

Mining cryptocurrency is expensive as it is. Someone has to buy the equipment, invest in adequate software licenses, set it all up, and pay an enormous electricity bill. In today’s climate, it’s questionable what kind of returns you’ll have.

Now, the last thing someone wants is to calculate all of these expenses and figure out that they’ll be able to break even (or even profit)… because they’ve forgotten that they also have taxes to pay. Mining rewards are an income, and they have to be reported as such.

Crypto gained through luck-based games

If cryptocurrencies are earned by playing luck-based games on online casinos, even if they are anonymous casinos, winnings have to be reported. Casino winnings, lottery winnings, sports betting, raffle prizes, and sweepstakes all have to be reported.

Underreporting or misreporting income (even this form of income) is a serious problem for anyone, and it could land someone in a huge deal of legal trouble. Therefore, this mistake should be avoided.

Calculating gains and losses

Once all the taxable events are identified, it’s time to put all income and expenses/costs on paper. To begin with, any taxable income has to be checked. Just because some value is exchanging hands, this doesn’t mean that someone is better off than before. So, there are a few things that need to be taken into consideration.

Start by calculating the cost basis. This means the exact date and time has to be noted, as well as the amount of money that was originally paid for the cryptocurrency in question. This includes the acquisition fees.

Next, the so-called fair market v alue has to be provided. This is the cost of cryptocurrency at the time of acquisition (at the time of the taxable event mentioned in the last section).

The most important part of this is the so-called capital gains. This implies that, at the time of the sale, the value of the crypto asset was higher than at the time of acquisition.

There’s also the opposite scenario, where the market value is lower than it was during the acquisition.

Federal vs. local taxation of cryptocurrencies

When it comes to the federal income tax, the IRS considers crypto assets to be similar to property. This means that they’re subject to capital gains tax rules.

State taxation varies by state. For instance, there are income-tax states and no-income-tax states, but there are also specific state regulations, which means that the state in question may offer tax incentives related to cryptocurrency. One example is Wyoming, which is quite proactive in creating a favorable regulatory environment for crypto businesses and users.

As more and more merchants accept crypto assets as payments, the question of state and local taxation of these resources becomes an even more important issue than before. The importance and adoption of cryptoassets are bound to increase further in the future, which is why understanding the regulations surrounding it become such a high priority for everyone.

Importance of reporting and keeping detailed records

Knowing how much has to be paid and just paying is merely one in a long series of necessary tasks to complete in order to settle obligations toward the IRS.

When it comes to reporting income from crypto activities, the right forms like 1040, 8949, and Schedule D are to be used. It all depends on whether money was made from mining, staking, or selling and trading.

Most importantly, all the detailed records have to be kept. A detailed transaction history with all receipts and statements and wallet addresses (of wallets involved in your transactions) have to be kept.

All of this can be made easier by using the right tax software. The user has to make sure to specify that they’re looking into software that supports crypto and crypto income. Let’s face it: in 2024, cryptocurrencies are such a vital part of our finances that the request is more than reasonable.

Crypto income is taxable; evading taxes can lead to serious trouble

It is 2024, and cryptocurrencies are no longer unregulated. They’re also no longer small and insignificant enough that they fly under the radar of the IRS. Settle all responsibilities toward the IRS. All the resources on the subject matter are available, which is why the idea that someone doesn’t know how to do this no longer holds up.

Disclosure: This content is provided by a third party. crypto.news does not endorse any product mentioned on this page. Users must do their own research before taking any actions related to the company.

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Dogecoin surges 10% as this new altcoin shakes the market, and preps for stage 2 presale

Published

3 hours ago

November 23, 2024

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Disclosure: This article does not represent investment advice. The content and materials featured on this page are for educational purposes only.

Dogecoin jumps 10% this week, while Yeti Ouro presale offers a 20% bonus, attracting eager early investors.

Dogecoin (DOGE) once again has embarked on a bullish trajectory after registering a significant 10% surge this week. While the memecoin continues to surge, a new utility memecoin Yeti Ouro (YETIO), gears up for the second stage of its presale, offering an enticing 20% bonus for early investors.

Dogecoin

Dogecoin has once again proven its staying power, experiencing a 10% increase over the past week and an astonishing 182% gain in the last month. Currently priced at $0.387736, DOGE boasts a market cap of nearly $57 billion, ranking it as the 7th largest cryptocurrency by market capitalization.

The Dogecoin rally is mainly attributed to the strong community behind the project and prominent names such as Elon Musk’s endorsement. The current rally has been fueled by the recent US presidential election. Analysts are projecting the coin to rally even more after Trump is sworn into office.

Is Yeti Ouro the next big opportunity?

While Dogecoin enjoys the spotlight, Yeti Ouro is rapidly turning out to be the next-generation utility-driven meme coin. Built on the Ethereum blockchain, YETIO combines meme culture with serious functionality, positioning itself as a Play-to-Earn (P2E) powerhouse and a potential 100X token. Already in the first stage of the presale, the project has raised over $514k, almost halfway through the stage

Behind Yeti OUro is Yeti Go Game, a high-energy, Unreal Engine-powered racing game where players can earn YETIO tokens by winning races, completing challenges, and trading in-game items. The game is set to launch very soon and to understand what happens behind the scenes, the team has released an exclusive video for investors to understand better, boosting confidence in the project.

Stage 2 presale: 20% bonus for investors

As the project prepares to enter the second stage of its presale, investors will get to enjoy a limited-time 20% bonus currently running, till November 25. This presale phase has already attracted attention from crypto whales and retail investors eager to capitalize on YETIO’s growth potential.

Why Yeti Ouro?

Yeti Ouro has a capped supply of 1 billion tokens, creating scarcity and long-term value. This is further amplified by a 5% burn mechanism, which reduces the total supply over time, driving upward price pressure. 50% of the tokens have been allocated to early investors who at the moment can get the coin at only $0.012.

To learn more about Yeti Ouro community, visit the website, Twitter, Telegram and Discord.

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Crypto millionaires will be made by April 2025: 6 coins to hold

Published

7 hours ago

November 23, 2024

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Disclosure: This article does not represent investment advice. The content and materials featured on this page are for educational purposes only.

Crypto markets are heating up, and these 6 coins could make millionaires by April 2025.

Crypto markets are reaching unprecedented peaks, offering many opportunities for investors. As the market hits a feverish pace, the chance for substantial gains has never been greater. Astute investors are focusing on cryptocurrencies that could deliver significant returns by April 2025.

One standout is XYZVerse (XYZ), a meme coin seeking to unite sports fans worldwide. It merges meme culture with sports passion, aiming for remarkable growth through a community-driven ecosystem.

XYZVerse: The all-sports meme token

XYZVerse is the first all-sports meme coin designed to unite sports fans across football, basketball, MMA, and esports within a community-driven ecosystem. As the MVP of the XYZVerse, XYZ blends meme culture with the excitement of sports, offering investors a unique opportunity to tap into two thriving markets.

Drawing parallels to Polymarket’s $1 billion trading volume during the US presidential election, XYZVerse takes the concept further by combining the hype of meme coins with the appeal of sports betting. With millions of fans expected to join, the ecosystem’s expansion offers substantial opportunities for early investors to capitalize on its growth potential.

Crypto millionaires will be made by April 2025: 6 coins to hold - 1

Currently in its presale at $0.000667, XYZ targets a listing price of $0.1, representing an ambitious 14,900% growth by its token generation event (TGE). XYZVerse aims to surpass previous standout performers like BOME’s 5,000% rise and WIF’s 1,000% rally, setting itself apart as a top contender in the meme coin space.

Supported by audited smart contracts, a vetted team, and upcoming CEX and DEX listings, XYZVerse positions itself as a strong investment. Its first-mover advantage in the sports-driven meme coin niche ensures that early participants could benefit significantly as the project gains momentum.

With the crypto market poised for euphoria in 2025, grabbing XYZ tokens could position investors for what could be one of the most exciting opportunities in the meme coin sector.

Interested investors can join XYZVerse through its presale.

XRP

XRP is a digital currency designed to enable fast, low-cost transactions worldwide. Built on the XRP Ledger, it was created by Jed McCaleb, Arthur Britto, and David Schwartz to move money as quickly as information.

XRP operates without a central authority, making transactions secure and irreversible while remaining accessible to anyone, even those without a bank account. When XRP launched, 100 billion coins were created, with 80 billion allocated to Ripple to support ecosystem development. Ripple uses XRP to improve liquidity and releases coins in a controlled manner.

In today’s market, XRP stands out for its speed and low transaction costs. Unlike Bitcoin, which often has higher fees and slower transaction times, XRP works with the existing financial system to facilitate seamless cross-border payments. The focus on bridging traditional finance and cryptocurrency positions XRP as a key player in the growing digital payments market.

Sui

Sui is a next-generation blockchain designed for security, scalability, and global adoption. It uses an object-centric data model, enabling efficient and flexible data handling. Built on the Move programming language, Sui prioritizes safety and solves common issues faced by other blockchains.

What sets Sui apart is its focus on user experience, offering innovations like zkLogin and sponsored transactions, which make blockchain applications easier to use. This user-friendly approach could help attract more participants to Web3.

In a market increasingly prioritizing user adoption, Sui’s accessibility and innovative design position it as a promising option for future growth.

Cardano

Cardano, powered by its native cryptocurrency ADA, is known for its flexibility, sustainability, and focus on smart contracts. Built for decentralized finance, token creation, and gaming, ADA rivals Ethereum as a platform for value storage, payments, and staking. Its environmentally friendly Ouroboros proof-of-stake mechanism minimizes energy consumption compared to proof-of-work systems.

Cardano’s unique two-layer system—one for transactions (Settlement Layer) and another for smart contracts (Computing Layer)—enhances scalability and speed, enabling it to potentially process up to a million transactions per second.

With its energy-efficient model and robust smart contract capabilities, Cardano aligns well with market trends favoring eco-friendly and scalable blockchain solutions.

Avalanche

Avalanche is a high-performance blockchain known for its eco-friendly approach, low fees, and lightning-fast transactions, capable of processing up to 4,500 transactions per second. Its standout feature, customizable subnets, allows users to create tailored blockchains.

Avalanche’s hybrid consensus mechanism combines Classical and Nakamoto principles, achieving transaction finality in less than two seconds. The Avalanche ecosystem is powered by AVAX, its native token used for transaction fees, staking, and custom blockchain creation.

With a focus on scalability, sustainability, and developer flexibility, Avalanche’s robust technology and unique features make it a compelling choice for businesses and developers, especially as environmental concerns grow in the crypto space.

Arbitrum

Arbitrum is a scaling solution for Ethereum, developed by Offchain Labs to enhance transaction speed, scalability, and privacy. Using optimistic rollups, Arbitrum bundles multiple transactions together, reducing costs and improving the efficiency of Ethereum-based smart contracts.

The ARB token plays a key role in the ecosystem, granting holders governance rights to shape the platform’s future. With an initial supply of 10 billion tokens and a low yearly inflation rate, ARB is designed for steady growth.

As demand for scalable blockchain solutions rises, Arbitrum’s ability to improve Ethereum’s performance makes it an attractive option for developers and investors alike.

Conclusion

XRP, SUI, ADA, AVAX are solid, but XYZ, as an all-sport meme coin targeting 20,000% growth by uniting sports fans, may be the standout in this bull run.

Learn more about XYZVersus on their website, Telegram, and X.

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Top crypto traders’ picks for explosive growth by 2025

Published

15 hours ago

November 22, 2024

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Disclosure: This article does not represent investment advice. The content and materials featured on this page are for educational purposes only.

Top crypto traders highlight 3 coins with explosive growth potential for 2025.

Investing in the right cryptocurrency at the right time can lead to incredible returns. As the market evolves, certain coins stand out with promising futures. Experienced traders have pinpointed three digital currencies expected to experience significant growth by 2025.

CYBRO breaks $4 million: Multichain DeFi investment

CYBRO is taking the crypto community by storm, with its exclusive token presale surpassing $4 million. This innovative multichain DeFi platform offers investors unparalleled opportunities, enabling them to maximize earnings across multiple blockchains regardless of market conditions. The CYBRO project, powered by AI-driven solutions, aims to redefine what it means to be at the forefront of decentralized finance.

CYBRO tokens, available at a presale price of $0.04, present a rare investment opportunity, with experts forecasting an impressive 1200% potential return on investment. This advanced platform has already piqued the interest of prominent crypto whales and influencers, signaling strong market confidence.

Adding to the excitement, CYBRO has rolled out a referral program, providing 12% on direct referrals’ token purchases, along with additional rewards from second and third-level referrals. Weekly rewards are distributed in USDT, and those using a referral code earn double CYBRO points on their first deposit.

Interested investors can join the CYBRO presale and target gains up to 1200%

CYBRO points offer yet another incentive for investors, allowing holders to gain automatic entry into CYBRO’s weekly airdrop, with up to 1 million points available. These points can be accumulated by investing in CYBRO’s DeFi vaults, providing investors with earning potential beyond initial token value.

After the presale, CYBRO token holders are in for a range of exclusive benefits, from high staking rewards to cashback on purchases, exclusive airdrops, reduced trading and lending fees, and an insurance program to safeguard their investments.

With only 21% of the total tokens available for the presale and over 100 million already sold, the supply is quickly diminishing, making this an opportune moment for investors.

Jupiter is a swap aggregator driving liquidity across the Solana blockchain. By providing essential infrastructure, it improves the efficiency and accessibility of decentralized finance (DeFi) on the network.

Jupiter is expanding its offerings with advanced tools like limit orders, DCA/TWAP strategies, Bridge Comparator, and perpetuals trading, giving users diverse options for managing digital assets. These developments position Jupiter as a key player in Solana’s growing DeFi ecosystem, fostering its continued expansion and adoption.

OP: Powering decentralized governance on Optimism

The OP token serves as the backbone of Optimism Collective, an experiment in decentralized governance for the Optimism Layer 2 blockchain. Managed by the Optimism Foundation, the Collective oversees protocol updates, network configurations, and incentive programs within the ecosystem.

With 5.4% of OP’s total supply allocated for funding projects via governance, developers in the Ethereum ecosystem are encouraged to apply for grants, making Optimism a hub for innovation and community-driven growth.

Conclusion

While coins like JUP and OP show promise for growth by 2025, they may offer less immediate potential. CYBRO stands out as a technologically advanced DeFi platform offering investors unmatched opportunities to boost their earnings through AI-powered yield aggregation on the Blast blockchain.

With staking rewards, exclusive airdrops, and cashback on purchases, CYBRO delivers user experience with seamless deposits and withdrawals. CYBRO’s commitment to transparency, compliance, and quality has attracted significant interest from major investors and influencers, making it a promising project in the current market.

To learn more about CYBRO, visit their website, Twitter, Discord, or Telegram.

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