Altcoins Talks - Cryptocurrency Forum
Crypto Discussion Forum => Cryptocurrency discussions => Topic started by: Flodner on December 26, 2020, 09:14:53 PM
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I just read an article about the crypto tax calculator. The author of the article helped his Australian friend to buy some cryptocurrencies, particularly Cardano and Ripple. While some people live in one of a handful of jurisdictions where capital gains are not taxed, the others might have big difficulties by calculating their profits or losses from investment into cryptocurrencies.
The article looks at the difficulties in producing tax reports when trading in crypto:
**Challenge #1.** Work out what category of tax you fall into
**Challenge #2**. Gather all your trading records in one place
**Challenge #3.** Coin hopping
There are basically two ways of calculation. You can do it manually, by hand, this might be ok for a few trades, but if you are an active investor or trader this will require either a lot of time or a lot of money to hire an accountant.
The second way is to use the crypto tax calculator (https://cointradeledger.com/blog/why-do-you-need-a-crypto-tax-calculator) for anything more than that. The article comes to the conclusion that this way is better if you want to be both tax compliant and ensure that you don't pay too much tax.
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Crypto tax calculator is a good thing as many countries have tax on income from cryptocurrencies. Filling out tax returns is a very time consuming process, especially if you trade on several exchanges. I think this calculator will soon come in handy.
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I don't think this crypto tax calculator is necessary for all crypto enthusiasts. It depends on your activity and level of involvement.
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Crypto users need a crypto tax calculator to exchange but not everyone uses it fees are charged on exchange sites based on the amount of the exchange and the transaction rate. Crypto tax calculators allow users to transact much faster.
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I do not agree that all crypto users should use this type of crypto tax calculator. I think people who work on multiple exchanges can use the crypto tax calculator. Use it for their convenience or depending on their activity. But I don't think it will be beneficial for all crypto users to use it.
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As far as I understand, a handy calculator will calculate taxes from a trader's income in the cryptocurrency market. But how will tax deductions be made for a cryptocurrency user who has bought and stores cryptocurrency in his wallets once?
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I think crypto tax will apply in centralized exchanges and they already have calculations regarding the crypto assets held with every regulation of each country.
However, if our crypto assets are in crypto wallets like MEW and other decentralized wallets, I don't think we need this calculation because it is clear that no one regulates it because there is no regulation for tax payments on crypto wallets other than exchange wallets.