Declaring Crypto Assets Could Save Investors Thousands in Taxes

In a perfect world, Bitcoin was going to reach $25,000 by the end of 2018. Unfortunately, the world didn’t turn out to be that perfect. Bitcoin fell to $3,127 the previous year, down 86% from its all-time high.

But the bearish sentiment was not limited to only Bitcoin. Investors long on other crypto assets, such as Ethereum, Ripple, and Cardano also lost massive amounts of investments in 2018. The cryptocurrency market as a whole wiped off 86% of its market cap since its all-time high. And it left its investors either holding as long-term believers or exit their positions for fiat on successive lower-low formations.

But there is still a silver lining for anyone bearing those losses, primarily for investors who live in a country that charges capital gain tax on crypto earnings. And it works when they file declare their crypto balance sheets in their annual tax return.

Capital Gain Losses in Crypto

Different countries have different capital gains laws so their method of deducting taxes based on investment losses should vary likewise. In the US, for instance, taxpayers can apply for deductions based on “realized capital gain losses,” which means declines suffered during the current fiscal year. If crypto investors continue to hold their assets onto the next year, they cannot claim a tax refund.

The UK treats the capital gain losses in somewhat a similar manner. The Treasury’s guidance clearly states that investors have to pay capital gains tax on any earning made by Bitcoin or any other digital currency over the yearly exempt amount of £11,700. Meanwhile, the UK taxman enables taxpayers to deduct taxes – worth the capital gains losses – on the future gains. Taxpayers who somewhat made gains during the bearish crypto year can also offset them into tax-friendly investments in the UK. Read here.

In Canada, the taxable capital gain/loss is 50% of the profit/loss – one to one. The country’s tax authority has already brought capital gain taxation on virtual currencies into law.

“Allowable capital losses can only be deducted from taxable capital gains,” according to Raymond Chabot Grant Thornton. “If you have generated capital gains during the year, an evaluation of your portfolio prior to year-end may enable you to minimize income taxes by realizing unrealized capital losses, as the case may be. Any capital loss that is not deducted in one year may be carried over and deducted from taxable capital gains of any of the three preceding years or of any subsequent year.”

Crypto Thefts or Frauds

If investors have suffered financial losses due to crypto thefts or frauds, they also become liable to seek relief from their taxing authorities in Canada, the US and the UK. ICO investments, for instance, could fit the purpose in those cases, having been cost their investors combined losses of billions of dollars.

AltcoinToday.com

Photo via Shutterstock.

Source: Newsbtc

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