How to avoid taxes with Crypto. For today’s post, we will be looking at different ways that we can get around paying extortionate taxes on Cryptocurrencies. As wrong as this might sound the sad truth is – that it is us, the poor and middle class that suffers. It seems any kind of Entrepreneurship for the average man is the last thing the elite few want.
If the last few years are anything to go by. Making your fortunes through Cryptocurrencies is becoming increasingly harder. Although it varies depending on location, for some places in the world the taxman has got their greedy eye on you.
Income Tax and Capital Gains Tax in countries like the UK and USA are now a Crypto Investors worst nightmare. In fact, it is getting so bad now that a Crypto Investor may be forced into paying over half of what they make to the taxman
For this reason, in today’s post, I am going to look at some precautionary measures that can be taken in the event that you do invest in Crypto and you end up making a whole truckload of $$$
Please note: Tax Avoidance Is illegal – the things I am writing about here are for informational purposes only.
How To Avoid Taxes with Crypto –
Read This Before It’s Too Late!
Nowadays the government will do anything in their power to tax the public. It is nothing new really but this is not only targeted towards businesses. The net has been cast out far and wide and the taxman is now coming for your crypto-currency. Indeed, this has created a lot of issues for hard-working, patient miners and traders.
A dystopian nightmare for many now that these financial issues exist. For the regular joe that has only just got to work in the world of Crypto, they are likely kicking themselves for not investing in Bitcoin before – now more than ever. Except there is nothing that can be done about this so with this in mind – I am going to share hypothetically how to avoid taxes with crypto…
This is because there are a few legal loopholes that exist that can really benefit any investors that use these. Taxes on crypto-currencies can easily be dealt with if you know how to take the right action before it is too late. Today we will be talking about a few different things that you can do to at least soften the blow for when the taxman comes knocking.
Short and Long Term Capital Gains Tax
Firstly, I think this should be the main thing to know if you live in the USA. Different states have different laws about CryptoCurrency but one thing all Americans have in common is they are required to pay capital gains tax on their earnings.
These taxations can be split into 2 different categories and yes unfortunately in the majority of US states Crypto does now fall under this umbrella. See these tables below;
*Please note the above chart is for Married couples. Different rates apply if you are Single the tax brackets are lower. It is better to file as a married couple than as a single person basically depending on how much you make.
So, just to explain short term capital gains tax applies to profits made in 1-year or less. Whereas long term capital gains apply to profits made from selling assets in a period of more than 1-year. If you can understand this then this is actually the first way you can avoid paying taxes on your Crypto assets.
Just make sure that you hold your Crypto for over 1-Year. Obviously not ideal for every Crypto because of its general volatile nature. However, at least this way you don’t have to pay short term capital gains.
I would recommend if you don’t want to risk your coins losing value to put your money into stable coins. They are not without their risks. After all their value is kept to match Fiat currencies and if Fiat currencies crash which they will (sooner or later) then this will also bring down the value of stable coins.
Although for at least the foreseeable future they at least are less volatile than say Bitcoin or Ethereum.
Which, also may I add have a pretty uncertain future themselves. They may be good for now but as they use Public Ledgers if the Taxman really wanted to he could find out everything he needs to know about you just by tracing your BTC activity.
Why ideas like these are good to know. Such as…
Setting Up A Retirement Fund
One idea to keep the Vultures at bay is to use your Crypto assets to set up a retirement fund. I guess this is more of an American thing but if you purchase an IRA (Individual Retirement Account). You can either set up a standard IRA which allows you to defer tax on gains until you start taking distributions.
A ROTH IRA on the other hand is much better as the contributions you make are tax-free. However, the eligibility for a ROTH IRA is more strict than a standard IRA as this is only for employees that do not make a 40K matching contribution.
Also, if you live in the USA another thing to note is you will need to set up an offshore bank account with an LLC company. This is to move your IRA to. You should also follow this up with your own research – I am merely only relaying this information from other sources but these are definitely things to look into.
Kind of like…
Tax-Free Gold, ICO’s
and Other Different Precious Metals
This is probably my favourite idea out of the lot of them. Trade your Crypto in for Precious Metals. Gold and Silver itself is a fantastic investment opportunity and best of all Gold is tax-free and there are many companies now offering services. Such as buying Physical Gold for Crypto and setting up ICOs (Initial Coin Offerings) backed by Gold.
Silver as well may be another good idea to look at but again do your own research. Each country is different. Just try to educate yourself before you cash in just enough so you are not screwing yourself over.
Apart from this, there is more…
The Nuclear Options…
i.) Move To Another Country With More Friendly Taxes
Yes, migrating to another country is probably a tad bit extreme but if you really want to avoid the taxman that badly this is one of the best ways to do it. Some good examples I would say are;
- Puerto Rico
and there are many others. Even Germany is pretty relaxed on Cryptocurrencies (for now). Just do your research. I think Gibraltar would be my choice they still charge a 10% flat rate through Cryptocurrency exchanges but otherwise Crypto is Tax-Free. They aren’t the best country for this but it is probably the best country in Europe in my opinion (in general).
ii.) Set Up A Life Insurance Policy
Unlike the idea about investing in Gold and Silver here is an idea I actually do not like at all one little bit. Not because it doesn’t work this is actually an ingenious way to avoid paying taxes but you can’t spend your money when your gone right?
However, if you want to leave something behind for your loved ones this could actually be a very shrewd move. The only drawback is the LIP needs to be made with an Offshore account and to set up these you need to have at least 1.5 Million in capital lol
Spend Your Crypto Like Regular Fiat Currency
This is my second favourite idea I think. Go on a spending spree buy yourself some new clothes, gadgets, collectables and go on holiday. Setting up a life insurance policy is probably the grimmest and boring thing you could do with your money. Unless you are either in your 60’s or 70’s I would say go out and enjoy yourselves.
Go on holiday and take your family with you. If they actually love and appreciate you I’m sure they would rather have a good time with you whilst you’re alive than having to wait for you to die to get your money.
I am not sure of too many places that you can pay for holidays and flights with Crypto but there is one website I wrote about in my previous post about Electroneum. It is called… and lets you pay for Holidays and Flights by using ETN.
Other than this I am not too sure of too many other websites that allow you to make purchases for physical goods for Crypto. Again the Electroneum App is a good one and I know there are others. I will maybe write about this in another post.
Now, another idea, if you are looking to invest further; or even diversify your investment, is to…
How To Avoid Taxes with Crypto – Invest In Privacy Coins
First of all, you’re going to want to get your hands on some coin. A few examples of privacy coins that we are interested in are Monero, Pirate Chain, PRCY, Dero, Grin and Wownero.
These are some excellent coins which we believe may soon take over the market so get these whilst there cheap!
To start buying we recommend that you join a crypto exchange called trade ogre. It maybe is not ‘the most secure website’ compared to the likes of Coinbase and Binance but it is quite simple to use and you can buy a great selection of different privacy coins here.
I don’t want to go too off-topic here but if you are looking for a way How To Avoid Taxes with Crypto this is a great place to invest. Once you have got hold of some privacy coins all you need to do now is wait.
As you probably know the crypto market is changing every second so you will never be short of new information and opportunities to make yourself some money, but the beauty here is these coins definitely appear to be where Crypto Investment is headed.
This is because unlike coins such as Bitcoin and ETH privacy coins like Monero and ARRR are completely untraceable.
How Do Privacy Coins Help To Avoid Tax?
Well, quite simple really Privacy coins are designed exactly for this purpose. As wrong as this might sound to some people the 99% of us are fed up with being screwed over for our hard-earned $$$
Privacy coin can help you save money in the crypto world and it is fairly simple to understand how the process works;
As previously mentioned in the article the government want as much money as possible from hard-working people. This does not exclude the crypto world. The government can track normal crypto-currencies such as bitcoin whereas they cannot with privacy coins such as Monero and Pirate Chain. It works similar to a good working VPN.
This gives traders the ability to temporarily save money and it should be taken advantage of as these coins may not be so cheap for too much longer. Not only this but this is maybe one of the biggest threats to the current economic model and in the coming years the elite few will likely try to stop this from happening as best as they can.
Although this is the beauty of it all really as Privacy Coins can’t be traced they can not be regulated.
What Is the Best Privacy Coin To Invest In?
I would say Monero, followed by Pirate Chain and then maybe DERO. Honestly, I don’t know what will happen in the next few years it is best to do your due diligent research on each coin individually and decide what sort of real-world value they have. Obviously, Monero and Pirate Chain are valuable for their Privacy, and Security but a good example I think is ETN.
This is not a Privacy Coin (I don’t think) but for me, I got quite excited about this project when I read about what it could be used for. Phone top-ups, shopping vouchers and holiday packages including flights and accommodation. Not to mention that people can actually earn ETN from freelancing on AnyTask.com.
That is the sort of coin you should look for I think but obviously see what Privacy features it offers.
So, How To Avoid Taxes with Crypto… The truth is that tax avoidance is illegal but sometimes what the taxman charges is absolutely criminal. Thank god for legal loopholes – knowledge is definitely power. If you are looking to cash in on Crypto just take a breather before you do. I know it is not exactly easy when the market is as volatile as it is but think about this…
“How many times have you been in a rush to get somewhere and forgotten about something important?”
Well, this is important to know I think and errors like this when you are in Crypto Investment can be costly. So take the opportunity whilst you can to look at things like taxes in your country and most importantly how you are going to react if you actually make a lot of money from Crypto… and I don’t mean walking down the bar and saying drinks for everyone.
Save that for when your investment is actually secure. Something I hope to write about very soon.
Many thanks and any questions please feel free to ask.
Alex & Jacob Chivers
PS: Another article you might find helpful on this topic – see below;
Disclaimer: Remember that Avoiding Taxes is illegal. Content discussed within this post is for informational purposes only.
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