Walking the Crypto Tax Tightrope in US

cryptonews.com:

Co-Authored by Jaideep Singh, CEO of AI-powered, SaaS platform FlyFin, Luke Olson, CPA, and Sridevi Yathirajyam, EA, FlyFin.

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Over the past year, investing in cryptoassets has been an unending wild roller coaster ride, with unexpected twists and turns. Most recently, investors have experienced exhilarating highs and plummeting lows. The Biden administration has issued an executive order, that seeks to create a framework of stricter and – some argue – more coherent regulations for the crypto sector. With annual tax filing deadlines around the corner for everyone, now is the time to prepare to shield your income from taxes and know how best to maximize your crypto gains and losses.

The Internal Revenue Service (IRS) considers cryptoasset holdings "property" for tax purposes, which means it is subject to capital gains tax rules.

For occasional traders or investors, crypto held for a year or less is subject to short-term gains rates and, held for more than a year, is subject to more favorable long-term capital gains rates.

If your losses exceed your gains, you can deduct up to USD 3,000 from your taxable income (for individual filers). If you had additional losses more than the maximum allowed, you can carry these losses forward and apply these deductions accordingly to future years.

If you mine crypto as a hobby, include the value of the coins earned as "other income" on Form 1040 Schedule 1.

Receiving interest income from crypto lending activities or liquidity pools is considered a form of taxable income and must be reported on your taxes, similar to mining and staking rewards.

Trading crypto is very similar to trading stocks and other securities, so many of the same tax rules apply. Crypto traders must pay taxes on the