Tuesday, April 13, 2021

New to Cyrpto but i'm getting my head wrapped around it. Tax questions and worries are deterring me from really starting though. Can I ask some questions so I feel more comfortable about all of this?

So I have my Exchange and my soft wallet (also know what I want for my cold wallet but haven't bought it yet). I really want to get going as soon as my bank wire goes through and my exchange is funded but I'm worried about making plays and then not knowing my way around the tax system and end up screwing myself. I'm in the United States.

So at this point I have three main questions and I hope to get some suggestions as well.

First and most basic. I've read up on some of the crypto tax software you can get that links to your exchange and keeps track of much of this for you. Do you link this software just when you go to do your taxes or do you have it linked to your exchange the whole year so it can keep track of your moves? As someone making probably minimal moves do you have software you suggest (I know some are free if you haven't made that many trades or sold much over the year)?

Second and the one that's messing with me the most. Here in the US just converting your Bitcoin to another coin is a taxable event. I understand that if you convert for a gain then that's a capital gains you'll pay and if you convert as a loss you can write that off. What I'm not getting, or how to keep track of it is, if you bought Bitcoin over many different days and at different prices and then you convert some of it to (lets just say) ADA, how do you know if the Bitcoin you are converting is making a gain or a loss since all the Bitcoin you ever bought is lumped together on you Exchange/wallet. I imagine people are converting their coins all the time, how do you keep track of this? This question is really scaring me off from getting started.

Third and last question. Lets say you are using the Yoroi wallet for your ADA and you are staking through that wallet. I know you have to pay taxes when each Epoch finishs and you get paid out. Is there software to keep track of this too? Is it different software then you would have for keeping track of your moves on your exchange?

Thank you in advance and I hope maybe this sparks some answers that help other out as well cause it seems like a good amount of people are jumping into Crypto and I'm not seeing much discussion about taxes I can imagine much of this doesn't even cross some peoples minds as they are excited to jump in and just get started.


No comments:

Post a Comment