Year-End Tax Strategies for Crypto Investors
2024 has been a great year for investors in cryptocurrency, with Bitcoin reaching all-time highs. Read on to see if you can take advantage of any year-end tax strategies for crypto investors.
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.
If you invested only in Bitcoin, you may not have any crypto losses.
However, you could incur 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 to future years to offset future gains or income.
Donate Appreciated Crypto to Charity
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.
Give Crypto to a Loved One
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.
Establish a Self-Directed Account
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).