Page 11 - aruba-today-20220127

A11
business Thursday 27 January 2022
Traded cryptocurrency in 2021? Here’s how to approach taxes

By SABRINA PARYS software or a tax preparer
of NerdWallet to calculate gains and
Professionals have a major losses. If you made trades
piece of advice for those off-exchange, though, you
who traded cryptocurren- might need to set aside
cy for the first time last year: some additional time for
Take your tax prep seriously. digging.
The IRS has been zooming 3. CONSIDER USING TRACK-
in on cryptocurrency re- ING TOOLS
porting with increasing in- Reporting a single trade on
terest in recent years. And one exchange likely won’t
the last thing you want is to be difficult. But a “typi-
lose money and time rec- cal taxpayer has three to
onciling your tax liability, five wallets and exchang-
says Douglas Boneparth, a es,” according to Shehan
New York City-based certi- Chandrasekera, CPA and
fied financial planner. head of tax strategy for
So as tax season gets into CoinTracker . This makes
full swing, here’s a quick it harder to reconcile cost
guide to which cryptocur- basis across varying plat-
rency activity is reportable, forms. If you’re an active
how it’s generally taxed trader, it might make sense
and the best ways to pre- to invest in software that
pare. In this Feb. 9, 2021, file photo, the Bitcoin logo appears on the display screen of a cryptocurrency can help track your trans-
WHAT YOU NEED TO REPORT ATM in Salem, N.H. actions.
TO THE IRS Associated Press 4. HIRE A PROFESSIONAL
The IRS treats virtual cur- essarily mean you’ll owe Short-term gains for assets vere cases, even tax eva- If your tax situation is com-
rencies as property, which taxes, says Andrew Gor- held less than a year are sion charges. And with the plex, consider working with
means they’re taxed simi- don, an Illinois-based cer- taxed as ordinary income, revision of Form 1040, which a cryptocurrency-savvy
larly to stocks. If all you did tified public accountant while long-term gains for now features a direct yes- tax professional. They can
was purchase cryptocur- and tax attorney. Just be- assets held more than a or-no question on whether guide you through the vari-
rency with U.S. dollars, and cause you have to report a year are generally taxed you received, sold, ex- ous accounting strategies
those assets have been transaction doesn’t mean at 0%, 15% or 20%, depend- changed or disposed of the IRS permits for reconcil-
sitting untouched in an ex- you’ll end up owing the IRS ing on your taxable income cryptocurrency, the IRS is ing your gains and losses,
change or your cryptocur- for it. and filing status. signaling that those who and help determine which
rency wallet, you shouldn’t HOW CRYPTOCURRENCY IS For example, say you pur- fail to report won’t be able one makes the most sense
need to worry about re- TAXED chased $2,000 worth of a to feign ignorance, Gordon for you.
porting to the IRS this year. Anytime you sell an asset cryptocurrency in January says. 5. MAKE LOSSES WORK IN
Reporting is required when for a profit, your resulting 2021 and sold it two months 2. GET YOUR RECORDS IN YOUR FAVOR
certain events come into gain may be subject to later for $5,000. That $3,000 ORDER If you didn’t take advan-
play, most commonly: capital gains taxation. To capital gain would be sub- Cryptocurrency exchang- tage of tax-minimization
— Trading one cryptocur- determine your exact gain ject to the short-term capi- es won’t be required to strategies last year — such
rency for another. or loss, you’ll need the date tal gains rate. send taxpayers 1099-B as tax-loss harvesting, gift-
— Selling cryptocurrency you acquired the cryp- Once you’ve calculated forms, also known as tax-re- ing or donating — but you
for fiat dollars (government- tocurrency; the date you your gains and losses on porting summaries, until the realized losses, you still
issued currency). sold, exchanged or other- Form 8949, you’ll need to 2023 tax year. So the onus have a chance to lower
— Using cryptocurrency to wise disposed of it; and the report them on Schedule D is on traders to keep accu- your tax bill. Just as with
buy goods or services (e.g., cost basis (the amount you of Form 1040. rate records of their trans- stocks, if you sold a cur-
paying for a cup of coffee paid plus transaction fees). HOW TO PREPARE actions. Many exchanges, rency at a lower value than
with cryptocurrency). Gains are then taxed at ei- 1. BE HONEST such as Coinbase, allow what you paid for it, you
A critical distinction to ther the short- or long-term If you omit information on you to download your trad- may be able to deduct up
make is that triggering a rate, depending on how your taxes, there’s a risk of ing history, which might to $3,000 of those losses on
taxable event doesn’t nec- long you held the asset. penalties, fees and, in se- make it easier for you, tax your taxes.q

WTO ruling finds China can penalize

$645M worth of U.S. goods

GENEVA (AP) — A World the WTO’s dispute resolu- million annually. The ruling
Trade Organization arbi- tion process, which the allows China to take ac-
trator has decided that United States has since tion to balance out what
China can impose retalia- gummed up by refusing to the WTO ruled were unfair
tory tariffs on imports from allow for new judges to be U.S. fees on some Chinese
the United States totaling appointed to its body that goods, including thermal Container ship Ever Far, left, sails down river past the Georgia
up to $645 million a year, acts as a sort of appeals paper, solar panels, wind Ports Authority’s Port of Savannah, Wednesday, Sept. 29, 2021,
capping a decade-long court. China had originally towers, steel sinks and sev- in Savannah, Ga.
dispute over U.S. duties on sought an award of $2.4 eral types of pipes. The Associated Press
some Chinese goods. billion per year, while the standoff pre-dates a string the Trump administration. nearly $3.6 billion that were
The dollar-value award is- U.S. had argued that fair of trade disputes between China still has not applied authorized by a WTO arbi-
sued Wednesday follows a compensation would have the United States and Chi- retaliatory penalties on U.S. trator in a separate deci-
decision in July 2019 from totaled no more than $106 na through the WTO during goods up to an amount of sion in November 2019.q