Dave Ramsey math to become a millionaire by 30.
- Pay off your 1.5% mortgage.
- Pay off your 0.9% car loan.
- Buy a 2K used car so you can have 10K of repairs.
- Use debit cards, not credit cards.
- Don't allocate even a tiny bit to
#btc
- Make coffee at home.
Getting a loan against your appreciated coins is a viable option to get liquidity without triggering a capital gains event.
But, you will have to pay capital gains taxes if you make more profits from the loan proceeds.
I don't think crypto will be pseudo-anonymous or privacy-preserving anymore, at least in the US.
Yesterday, the IRS issued the long-awaited draft Form 1099-DA, the first tax form specifically designed to collect your ID and detailed transaction data at scale from "brokers".
Several crypto lending/yield platforms froze or limited withdrawals due to the recent crypto crash and liquidity crunch.
If your funds become totally irrecoverable, you may be eligible to write them off as a Nonbusiness bad debt (§166(a)(d)) on your taxes.
How it works 👇
How billionaires pay little to no taxes in the US 👇
Step 1: Know the tax rules
Tax 101: Income is taxed at the time of receipt. Wealth is not taxed at the time of receipt. It gets taxed only when you sell.
Income = Wages
Wealth = Appreciated stocks, crypto & assets
Rewards received from crypto debit/credit cards are not taxable.
This is because cash/crypto back is considered not income. It's an adjustment to the purchase price.
- FAQ-
You will get different types of tax reports (1099-MISC, 1099-B, 1099-K, Transaction report) from crypto exchanges this year.
Here's what they mean and how to avoid overpaying taxes 👇
Do you need a special "Crypto accountant" to file your taxes? 👇
(Disclaimer: I don't practice anymore. I have nothing to gain from this thread other than telling you the truth)
Rewards received from crypto debit/credit cards are not taxable.
This is because cash/crypto back is considered not income. It's an adjustment to the purchase price.
- FAQ-
Alaska, Florida, Nevada, South Dakota, Texas, Washington, Wyoming - states with no income taxes.
If you cash out crypto or NFTs there, you automatically save 5% - 15% of your total tax bill.
Here's your IRS tax bill on a 1M
#BTC
cash out.
Scenario:
- You live in a state with no state income taxes like TX.
- Assume you only have the BTC gain in 2024 for simplicity.
- You held the coins for at least 1 year before selling in 2024. Cost basis = 200K.
- You are
According to the IRS interpretation of the law, staking rewards are taxable upon receipt.
On 1/20/23, the IRS updated its Digital Assets page to reflect this.
You should also check "Yes" for the crypto question if you receive any staking rewards.
How billionaires pay little to no taxes in the US 👇
(Buy, Borrow & Die strategy)
Step 1: Know the key tax rules.
Tax 101: Income is taxed at the time of receipt. Wealth is not taxed at the time of receipt. It gets taxed only when you sell.
Income = Wages.
Wealth =
BREAKING: IRS has decided not to tax staking income at the time of receipt - reported by Blockworks.
We don't know the specifics yet until we see the actual court ruling tomorrow. But, I'm hopeful!
Stay tuned for a detailed thread tomorrow.
Furthermore, in the new draft Form 1099-DA, the IRS has included “unhosted wallet provider” as a check box.
This further signals the IRS’s intention to include unhosted wallets under the broker definition despite the industry feedback.
What does this mean to you?
Going forward,
Planning to write a thread on crypto accountants.
Who are "crypto accountants"?
Do you need one?
If so, when?
How to pick one?
What can an accountant actually do for you?
What should you not expect from a CPA?
How does pricing work?
Any other questions?
As
#btc
approaches its all-time high, here are the top 6 things to keep in mind to NOT get screwed by taxes.
1/ Cashing out BTC is a taxable event.
Ex: You paid 10K for 1 BTC and sold it for 50K. You have a taxable gain of 40K.
2/ Converting BTC to some other coin is a
Rewards received from crypto debit/credit cards are not taxable.
This is because cash/crypto back is considered not income. It's an adjustment to the purchase price.
- FAQ-
The maximum amount of capital losses you can claim in a year is 3K.
But, what if you lost 100K in $LUNA or $UST?
Assuming there are no other gains, it will take you 33.3 years (100K/3) to get the full tax benefit from the loss you had this year.
Well, there may be a solution.
The Form captures unsurprising data points such as date acquired, date sold, proceeds, and cost basis of crypto assets sold.
This information is needed and helpful for the taxpayer to complete their crypto tax filings.
However, the collection and reporting of the following
Rewards received from crypto debit/credit cards are not taxable.
This is because cash/crypto back is considered not income. It's an adjustment to the purchase price.
- FAQ-
This month, federal prosecutors brought the first pure legal crypto tax indictment against a Texas individual.
Here's what he did (allegedly) 👇
This individual;
1/ Sold ~3.7M of
#BTC
and bought a house.
2/ 2017 tax return: Falsely inflated the cost basis of BTC to reduce