Ideas on how to save Taxes on Crypto Income | Let the profits stay in your pocket

Hey Steemians,

Huge success of Cryptos and hundreds of success stories heard where people made fortune with Bitcoin and earned massive amount of money but now its comes to pay taxes for your earned money. IRC 1031 tax-free exchange cannot be used in crypto-world anymore; beloved Bitcoin could be a part of your tax. 1031 was able to save the profits earned by helping you to stay away from taxes. But now as it is not applicable, possibilities exist that even swapping between cryptocurrencies will be a taxable transaction. Investing crypto profits in business could cost a lot more than it did before. Internal Revenue Service would be one of the biggest troubles in this scenario as they are extracting the coin base costumer data. But there are some legal ways to stay away from IRS’s radar and save those profits from flowing into taxes.

If you are a US resident, there are a plenty of options to choose from. Last place to reside for a person who’s trying to save on taxes will be California. For higher income tax payers, 23.8% of total income goes in taxes which include tax under Obamacare which is 3.8%. If the person has long term investment plans, 13.3% tax will be further added to the total without any tax break which is a lot. So if the terms are unacceptable then there has to be another location to shift. Although the shifting will take at least year and a half but there are some places which are worth a try. No income tax is charged in South Dakota, Washington, Texas and Florida. Two options can be considered shifting to another place. First can be purchase of citizenship (range from $1.2 million in Malta and $20,000 in Panama) or staying in a place for as much time it takes to qualify. Puerto Rico is another best place for the people of crypto world. A US citizen has to stay for 183 days on the island to qualify for its citizenship. For any online business to be run on the island, only 4% of tax can be charged from the citizen. Purchase a house in less than two years and all short term profits will be tax free.

Adding digital currency to life insurance can be easy way of crossing huddle known as Tax. A private placement life insurance can be purchased overseas which would be equal to traditional Individual retirement account. Investment of approximately $2 million is required in this case. Taxes can be delayed for desired time if the insurance policy is held for a long time and then sold. Cryptocurrency can be passed on the heirs if policy is held till last breath. There would be zero tax and coins will be transferred while the price will lock the day owner passed.

No tax is involved for an amount of $15,000 if the currency is gifted to family or a friend per year. After that IRS expects you to pay a gift tax return. Gifting someone such stuff has to be real. Good news is that amount that can be transferred throughout life time has been increased to $11.2 million per person. There have been several cases of fake transactions with gifting as an explanation to them. It is not necessary that gift can only be to a person which brings up next way to save some money. Charities are normally tax free so you can definitely get some benefit for the charities you make with your profits earned with Cryptocurrencies. Happy Earning!

Disclaimer: Information shared above over Finance & Taxes is for general knowledge only. Before considering any of the advice, you should definitely consult with your local/Country's financial and legal advisor. Author of the article is not liable for any loss or damages occurred due to use of any information shared as above information is no alternative to a financial advice. The user must understand and accept the sole responsibility of his own actions.

Please share your opinions. Your suggestions are most welcomed.

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