Bitcoin Price Drop Is Not A Terrible Thing, After All

As the price of Bitcoin (BTC) jumped this year, so too did the tax liability for every profitable sale, trade or exchange for Bitcoin traders

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After many countries around the world such as the United States, the United KingdomFrance, and Portugal published their own cryptocurrency tax guidelines this year, it is only reasonable they will expect to see an increase in crypto tax filing. They may even follow suit with the U.S. Internal Revenue Service and begin their own crypto tax compliance campaign.

The recent drop in Bitcoin price presents traders with a great opportunity to reduce tax liabilities accumulated since January 2019.

Countries that consider cryptocurrency an asset subject to capital gain tax also enable crypto traders to report capital losses:

TWO THINGS TO CONSIDER:

  1. If you have made profits from crypto trading since the beginning of this year, and have some losses now that the price has fallen, you can offset this loss and reduce your tax liability.
  2. Some countries, like the U.S., enable you to choose which particular Bitcoin token to sell. Therefore, you can choose to sell the same Bitcoin you purchased when the price was high now at a lower price.
Bitcoin
Furthermore, you may benefit from tax planning based on the specific identification method even if you did not accumulate crypto activity profits this year and instead incurred capital losses.

You can offset losses against any other capital gain you made this year or keep them to offset in the next year that you gain profits.

Tax season of many countries begins in two months, so you only have one month left to plan.

It is essential to remember that tax rules vary by country. Therefore, it is advisable to consult a local crypto tax professional.

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