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5 Ways to Easily Calculate Taxes on Your Crypto Earnings

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5 Ways to Easily Calculate Taxes on Your Crypto Earnings

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Tax season is in full swing for millions of people. Even though the coronavirus pandemic has led some regulatory agencies like the U.S. Internal Revenue Service to extend the filing deadline for 2020 returns, many prefer to finish their taxes as quickly as possible to potentially get a return.

The popularity of cryptocurrency means many taxpayers have a new asset class to incorporate into their filings. 

Tax authorities are now taking a more stringent look at crypto holders and traders. The IRS has issued revised instructions for tax filers in the last couple of years and now directly asks on the 1040 form if a taxpayer received, sold, sent,m exchanged, or otherwise acquired any “financial interest in any virtual currency.” 

Crypto holders understandably now pay closer attention to their tax returns as regulatory agencies both clear up questions about digital asset classification and express greater interest in hunting down crypto tax cheats. In March, the IRS sent a “John Doe’ summons to Kraken and issued another to Circle in early April to get specific user information. 

Fortunately, there are a number of ways crypto holders can calculate taxes based on their earnings and present accurate information to pertinent authorities. Here are five different options any investor can rely on.

Use A Crypto Tax Software

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Crypto-focused tax software is increasingly popular among those unwilling to fork over large amounts of money to an accountant. A crypto solution like CryptoTaxCalculator charges a yearly subscription fee to import and categorize transaction histories to generate tax reports. All a user needs to do is connect exchange data or public wallet address after making an account. CryptoTaxCalcuator supports more than 100 exchanges and a wide range of transactions, including trades on decentralized exchanges, staking rewards, airdrops, mining rewards, ICOs, OTCs, and lost/stolen funds.

Hire A Dedicated Accountant

Crypto-related tax laws often change quickly and can be very confusing. Accountants with an emphasis on cryptocurrency transactions can take a user’s activity reports, convey information about responsibilities, and file a tax return on behalf of a crypto investor. This option remains the most expensive based on the accounting expertise needed to keep up with detailed tax rules and regulations surrounding crypto.

Calculate By Yourself 

Users who have just a few transactions across the year can save money by handling the crypto portion of their taxes by themself. Many software programs like TurboTax make it simple to manually enter the details of each crypto transaction and then calculate tax obligation. Due to how much information some transactions require, this strategy is only best for those who keep good records of when they bought and sold coins. 

Rely On Traditional Tax Software

Some traditional tax software allows users to upload a CSV file of transactions directly into the program. The platform takes the information and automatically categorizes transactions to compute any tax obligation. Many leading exchanges offer the ability to download transaction history in just a few clicks, meaning a user just has to drag and drop files from exchanges into tax software platforms. This process is a relatively easy one as the software platform ‘does the work’ for you. 

Turn To A Hybrid Approach

Since tax laws can be very different across multiple jurisdictions, what works for one crypto user might not be the best for another. Some might find it prudent to do a little work categorizing their transaction records at home before bringing them to an accountant to determine tax obligation, or to double-check a gains and losses report before it’s filed to regulators. An approach combining a few different steps can be a smart way to save money while ensuring an accurate return, especially for those who already have a complex tax situation before crypto. 

The array of options to calculate crypto taxes means filing season does not have to be stress-filled for crypto holders. Various options and tools make it easy to calculate crypto taxes and accurately report gains and losses to authorities. 



DISCLAIMER Read More

The views expressed in the article are wholly those of the author and do not represent those of, nor should they be attributed to, ZyCrypto. This article is not meant to give financial advice. Please carry out your own research before investing in any of the various cryptocurrencies available.

Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://zycrypto.com/5-ways-to-easily-calculate-taxes-on-your-crypto-earnings/

Blockchain

Rothschild Investment Buys $4.75M in Shares of the Grayscale Ethereum Trust

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Asset manager Rothschild investment Corp has acquired 265,302 shares from the Grayscale Ethereum Trust, a purchase worth $4.75 million.

According to an SEC filing on April 15, the firm also bought an additional 8,000 shares of the Grayscale Bitcoin Trust (GBTC), now owning a total of 38,346 shares.

Not The Rothschild You Think

Rothschild Investment Corp has nothing to do with the Rothschild family, but many in the community are still confused. 

Founding members Monroe Rothschild and brother-in-law Samuel Karger have said the firm has no relation with the wealthy dynasty originally from Frankfurt. In 1995, New York Times published an article that clarified the differences between both branches.

Rothschild Investment Corp was founded in 1908, headquartered in Chicago. The firm holds over $1.2 billion in its portfolio and over 450 open positions in the market.  Unlike the famous bankers, the firm has been accruing shares since 2017, long before traditional institutions started investing in crypto assets. 


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Grayscale Finally Hit the $50 Billion Mark

The recent purchase comes after Grayscale hit the long-awaited $50 billion mark. As reported, Grayscale finally holds over $50 billion in total assets under management (AUM). The GBTC alone holds $41,442 million, while the Ethereum Trust holds over $7,420 million. 

Ethereum also hit a new all-time high by reaching $2500 after a parabolic run in the last five months. It soared 13.7% last week, breaking its previous resistance at $2,2007. The Berlin hard fork went live a few days ago in an attempt to reduce the high fees on the network, but many users have complained about syncing issues for the network nodes.

The crypto market was overall bullish in the last weeks but the market took a u-turn this weekend, causing mayhem across the board, liquidating over $10 billion worth of both long and short positions in less than a day.

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Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://cryptopotato.com/rothschild-investment-buys-4-75m-in-shares-of-the-grayscale-ethereum-trust/

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Are we there yet? Here’s why one analyst says its not ‘altcoin season’

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Few traders would argue against the fact that Bitcoin (BTC) is in a bull market, but there is less consensus on whether the market is in the midst of an “altcoin season.” A quick view of Crypto Twitter shows the schism between traders who are certain we are halfway through alt season and those who believe it has yet to begin.

Typically, traders rely on a wide swath of indicators and metrics, like Bitcoin’s total market capitalization versus the total altcoin market cap, Bitcoin’s dominance rate, and whether low-cap altcoins have rallied by a certain percentage.

As is the nature of investing, too much signal can at times produce mixed results, so Cointelegraph decided to have a chat with Ben Lilly, co-founder and analyst at Jarvis Labs, to see where he and his firm think the market currently stands and to determine the most appropriate metrics to use in figuring out whether or not an altcoin season is truly at hand.

Cointelegraph: A number of analysts claim we’re in an altcoin season, or at least right at the verge of one. Some are looking at support/resistance flips and fractals on altcoin market cap charts (isolated from BTC’s market cap) to make convincing arguments. Why do you think that we are nowhere near an altcoin season?

Ben Lilly: I believe everybody’s interpretation of what defines an altcoin season varies. For many, altcoin season might exist when both BTC and altcoins move higher. This is opposed to Bitcoin rising while altcoins remain flat or drop.

I think this is a fair view of altcoin season, but it’s not necessarily one I subscribe to. Simply because if this is a definition for altcoin season, it’s not a compelling reason for me to move away from Bitcoin and into altcoins from a risk-adjusted perspective.

Because in that definition of altcoin season, Bitcoin is still the preferable asset to own.

We think of altcoin season as market movements that take people by surprise or at least make traders rethink what is normal.

CT: So, altcoin seasons are not reflecting a macro-level trend shift in the market direction of Bitcoin’s momentum?

BL: Well, getting back to what I said earlier, support and resistances are helpful ways to explain. We can view these as areas that, when broken, create fast price action. It’s the type of action you want exposure to, assuming you’re on the correct side of it. While anything in between these supports and resistances can almost be assumed as “expected” or normal — in a loose sense.

To figure out where this area might be, we can look at a Bitcoin dominance chart. This lets us know the percentage of the market Bitcoin represents. Right now, it’s trading in a range, which is to say an “expected” range. And because it’s trending down, this is good for altcoins as Bitcoin concedes some dominance to other coins.

While many might point to this and say it’s an “altcoin season,” I’ll point out that this type of activity tends to happen in a bull cycle because new money is moving in.

In fact, we’ve been trading in this range of expectation from the middle part of 2019, which coincides with when Bitcoin found its low and began to turn bullish.

Bitcoin market cap dominance weekly chart. Source: TradingView, Jarvis Labs

Oddly enough, we recently jumped out of this range in late 2020, and when we did, Bitcoin went on an absolute tear. During this run, altcoins lost value. And similar to how Brent Johnson describes his dollar milkshake theory, Bitcoin sucked up the market’s liquidity as it ran higher.

We have since returned to this range of expectation, also known as the normal area of the market.

Now, if the opposite happens and we break this expected range to the downside, in our point of view, this will signify that altcoins are the asset to be sitting in, as they will generate outsized returns relative to Bitcoin. That’s when things will get wild.

CT: For years, traders have pinpointed the shifts in dominance rate between BTC and altcoins as a relevant indicator of when altcoin season begins. As the theory holds, when Bitcoin’s price consolidates or is in a downtrend and its dominance rate drops below a certain percentage, altcoins capitalize on Bitcoin’s range-bound action by rallying higher. What thoughts do you have on this?

BL: Similar to what I explained previously, it’s all about expectations. As soon as the market creates a change in view of what’s normal, then “altcoin season” will appear.

Another chart I’m frequently leaning on is the ETH/BTC pair. When Ether gains in relation to BTC, this is generally a good sign for altcoins. And recently, there’s been some bullish momentum on the chart within its current range of expectation.

The ETH/BTC pair is currently forming what we can describe as the Livermore Accumulation Cylinder. For more than a month, we have been discussing this in our free “Espresso” newsletter from the Jarvis Labs Substack, and what is clear is that the chart is taking form and is at the later stages of its trend.

If ETH/BTC breaks up and out of this cylinder, it’ll be another moment where expectations of what is normal will be adjusted. This is when we will see fast price action, and likely an altcoin season.

ETH/BTC weekly chart. Source: TradingView, Jarvis Labs

CT: While a rising tide does lift all boats, altcoins have been the top performers in the market when compared with Bitcoin. A quick look over CoinMarketCap shows that at least 50 have made moves that are well above 100%, and the altcoin market cap has risen from $250 billion in January to nearly $900 billion today. In your opinion, what is the primary signal that the market is in a proper altcoin run?

BL: Now, this is a bit different than an altcoin season, in my opinion. That’s because a proper bull run for altcoins is when investors are more likely to walk further out on the risk curve of crypto versus simply buying Bitcoin, not necessarily outsized gains compared with Bitcoin.

Based on this definition, we can make the case that whenever Bitcoin dominance is falling while crypto as a whole is in a bull market (like today), then this is a bull market for altcoins.

While investors might not have outsized gains relative to Bitcoin in a proper altcoin bull run like they would in an altcoin season, it is wise to begin building exposure to these higher-risk assets in this environment.

CT: Does on-chain data have any value in determining when alt seasons begin?

BL: Absolutely. On-chain is very valuable if you know how to filter out all the noise that comes with it. With crypto, there’s so much transparency in seeing transactions on-chain. This creates a trove of data that can be looked at in hundreds of different ways, many of which are somewhat meaningless.

At Jarvis Labs, we filter out all the data to find the data that matters. Then we run it through algorithms to create trade signals. It’s high-value data analytics and tends to be used in place of in-house analysts.

In saying that, on-chain is still an evolving space outside of Bitcoin and Ethereum. We’re on half a dozen blockchains watching these signals evolve and generating a variety of reliable signals will better pinpoint exactly when trend shifts take place and altcoin seasons begin and end.

One simple thing traders can follow in order to see the progression of an altcoin season is USDT flows.

When an altcoin season arrives, we’re likely to see USDT flow into other layer-two protocols such as Polkadot, Cosmos and Solana. That’s because many small-cap assets that are very far out on the risk curve, which tend to be bought in these types of environments, will exist on decentralized exchanges rather than centralized exchanges.

As investors start buying up these small-cap assets, liquidity will arrive, and USDT is the most ubiquitous form of liquidity in the market.

So, when USDT enters these ecosystems by the hundreds of millions, you can be sure it’s altcoin season, as investors will be chasing these assets only found on DEXs native to their protocol (i.e., Serum).

CT: Is it possible that the narrative may be changing and that some altcoins are breaking away from their reliance on the performance of Bitcoin, shifting what an altcoin season may look like?

BL: The changing landscape of risk is how I view this particular question.

And as other assets begin to grow in market cap and age, the network effects will grow. This, in turn, will insulate many crypto assets from Bitcoin since a lot of value will be attached to them.

In this way, over time altcoins will slightly deviate away from BTC’s performance.

Ethereum will be the first asset to do this, simply because of where it’s at in terms of its life cycle and development. But in terms of being immune to Bitcoin’s price, this won’t happen for many years. In fact, I think there will always be some correlation to an extent.

That’s due to macro reasons. Simply put, commodities as a whole tend to have a correlation to one another, equities as a whole have correlation, and even currencies tend to move in tandem with one another (i.e, USD, CHF, JPY). In saying this, crypto as a whole is likely to move in tandem with one another for at least most of this decade if not longer.

Disclaimer: Cointelegraph does not endorse any content or product on this page. While we aim to provide you with all the important information that we could obtain, readers should do their own research before taking any actions related to the company and carry full responsibility for their decisions, nor this article can be considered as investment advice.

Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://cointelegraph.com/news/are-we-there-yet-here-s-why-one-analyst-says-its-not-altcoin-season

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COINQVEST and Anclap introduce inflation free cryptocurrency payment processing for Argentina

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COINQVEST, a licensed virtual currency service built on the Stellar Network that allows merchants to accept, manage and disburse cryptocurrency payments, today announced its collaboration with Argentina-based Anclap, a Peso Argentino anchor and financial technology service provider, to bring blockchain-based and inflation-free payment processing to merchants and enterprises in Argentina.

Anclap provides real-time bank account integration in Argentina and helps businesses protect themselves from the inflationary nature of the Argentine Peso.

The COINQVEST platform offers Argentinians secure payment processing of transactions in BTC, ETH, XLM, and other major cryptocurrencies or stablecoins with settlement to international and local fiat currencies. Merchants can on and off-ramp funds from digital wallets or brick-and-mortar bank accounts.

Benefits of COINQVEST include non-custodial settlement, reduced costs and settlement times, crypto wallet and fiat bank payouts, customer invoicing, and compliant record-keeping.

“Argentinian merchants can now settle sales in USD and maintain a USD balance sheet to protect themselves from the depreciation of the Argentina Peso. Settled funds can automatically be exchanged into ARS using payment rails provided by Anclap in real-time.”
– Marcin Olszowy, Co-Founder at COINQVEST

COINQVEST’s service offers solutions for developers and non-developers alike. A hosted checkout interface was created for lean businesses without web development personnel. For enterprises with a dedicated development team, COINQVEST’s powerful and well-documented API with white-label capability is available for greater control and customization.

“COINQVEST is redefining the digital payments industry. It brings countless benefits for Argentine businessmen and entrepreneurs. Anclap participates in this process connecting e-commerce with the local financial system through Argentine Pesos, providing an on-/off-ramp to the network, and allowing access to new global financial services instantly and safely, maintaining full compliance with PLA/FT regulations.”
– Ivan Mudryj, Co-Founder at Anclap

Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://www.cryptoninjas.net/2021/04/20/coinqvest-and-anclap-introduce-inflation-free-cryptocurrency-payment-processing-for-argentina/

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