2024 has been a great year for investors in cryptocurrency, with Bitcoin reaching all-time highs.
With high profits, however, can come high taxes. Fortunately, there are several strategies you can employ before year-end to reduce your 2024 crypto taxes.
Losses?
If you invested only in Bitcoin, you may not have any crypto losses.
But you could have losses if you invested in other forms of crypto. If so, you should consider selling your losers before the end of the year. You may fully deduct your losses from any capital gains you realize during the year, such as gains from selling other crypto or stocks at a profit.
If your losses exceed your capital gains for the year, you can use your remaining losses to offset up to $3,000 in personal income. You can carry any unused losses over to future years to offset future gains or income.
Donating?
Donating appreciated crypto to charity is a great tax strategy if you’re charitably inclined. You’ll not only help a charity, but you’ll also get two terrific tax benefits:
- You avoid long-term capital gains taxes on your appreciated crypto.
- You can get a charitable contribution deduction equal to the appreciated value.
To obtain the benefits described above, you must (a) itemize your deductions on Schedule A, and (b) have held the crypto for more than a year.
Gifting?
You should also consider giving crypto to a child, a grandchild, or another loved one. For 2024, you may gift up to $18,000 to an unlimited number of people without triggering any tax or reporting obligation for you or the recipients. If you’re married, you and your spouse may gift $36,000.
Retirement?
Another strategy is establishing a self-directed IRA or a self-directed solo 401(k) to purchase crypto. You can use a self-directed regular or Roth IRA or 401(k).
How We Can Help
Sterling Tax and Accounting is here to help your business with tax planning! Our comprehensive approach to tax planning helps reduce your overall tax liability and keep more money in your pocket. If all your accountant does is file your taxes, chances are they are making you pay more than your fair share of taxes.
Learn how to proactively save on taxes by scheduling a call with our tax planning specialists.
Our tax planning, accounting & business services help you stay on track. Sterling Tax & Accounting will work with you to optimize your business and minimize your taxes. We will work to provide you and your business with the tools and resources you need to build a solid tax and business foundation. We’re a trusted CPA Firm in Sarasota, Florida. We serve clients all over the US, and proactively work to minimize their taxes.
Welcome to the Sterling Standard of business! Want to learn more? Schedule a meeting with our tax planning team here: https://www.srqtax.com/contact-us/
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