Most people have heard of cryptocurrency by now, especially given its recent spike in popularity. Despite that, many crypto investors don’t know much about how their taxes work, which can lead to a confusing situation when tax season rolls around.
Different countries have different rules about how crypto investments and gains are treated within the tax code, but these differences can make it even more difficult for both professional and amateur investors to manage their finances. Fortunately, companies are beginning to develop software to lend a hand. If you’re a crypto enthusiast or want to know more about the industry, read on to learn about what Token Tax is and how it can help you in the crypto market.
What is Token Tax?
If you deal in cryptocurrency, you probably know that doing your taxes can be complicated. Token Tax aims to help investors simplify the process in a constantly changing legal system. One benefit of Token Tax is that it can connect directly to your account on a number of crypto exchanges, including Coinbase. Token can be used by both individuals and accountants who need help understanding the complicated landscape of managing cryptocurrency.
In the United States, the tax rate for returns on cryptocurrency is the same as the capital gains tax rate. Your crypto-asset gains are calculated by your income and the holding period (how long you’ve held the cryptocurrency). The 2021 capital gains tax ranges from 10 to 37 percent for short-term capital and zero to 20 percent for long-term capital gains.
You can do your taxes on your own, but there’s value in having a tax professional take care of it for you. Not only can you make use of their customer service features to ask the TokenTax guys any questions you might have, but you’ll also gain peace of mind from knowing that a qualified expert is taking care of your finances for you.
Can you make major purchases with crypto?
Given how widespread crypto adoption has become, many people are wondering what they can buy with crypto. While it has mostly been used for online purchases, some larger companies are starting to accept cryptocurrency as payment for a variety of goods and services. One real estate billionaire has even begun accepting rent paid in Bitcoin at both retail and residential properties. That said, the number of retailers who accept cryptocurrency for the majority of purchases is still fairly limited.
Larger purchases, like your home, are likely to still require fiat currency for the foreseeable future in most cases. So if you’re looking for the best home warranty companies in GA, for example, you shouldn’t expect to be able to pay in Bitcoin yet. That doesn’t mean it won’t be possible in the future, especially given the resurgence of interest in making cryptocurrency a part of day-to-day life. Investors see a future where everything from their refrigerator to their plumbing to the home warranty plan that covers them can all be paid for using crypto.
Taxes can be complicated under the best of circumstances. Once you start dealing with complicated investments, things can get even more difficult. For crypto investors, Token Tax is the best way to avoid the hassle. While cryptocurrency adoption is becoming more common, digital currency still has a long way to go before it’s as versatile or useful as traditional fiat currency.
With more societal investment in making crypto useful for daily expenses and more traditional purchases, cryptocurrency could become a legitimate part of our financial ecosystem in the United States. As cryptocurrency gets more popular, services like Token Tax will be essential for people to manage cryptocurrency as a part of a balanced investment portfolio.