How does the IRS track players for their crypto winnings?
Players who trade their crypto casino winnings will be subjected to capital profits taxes. If you pay for commodities and services with your crypto winnings or swap your crypto winnings for fiat or other cryptocurrencies, you're obliged to pay taxes. Your taxes will be according to how much your casino winnings have increased since you won them. However, there are several ways you can avoid paying taxes on your crypto casino winnings or minimize them.
How to reduce your crypto casino winning taxes
Long term investments
One of the easiest ways of reducing your crypto-winning taxes is to delay them till they are long-lived assets. If you hold your crypto winnings for over a year, you are guaranteed to pay fewer capital profit taxes. Because cryptocurrencies are unstable, and their prices could rise or drop over some time, players should consider long-term investments after acquiring crypto casino winnings.
Gather your net loss
If you store your crypto winnings for long-term investments and their value decreases, accumulating your tax loss could be a remarkable way to reduce your entire taxes. To achieve this, you need to trade your cryptocurrency at a net loss to obtain savings from your casino-winning taxes. While harvesting your tax losses, in comparison to other properties, cryptocurrency has an upper hand. Therefore, players can trade their crypto casino winnings, obtain revenue loss, and reclaim their cryptocurrencies.
Obtain returns in a penniless year
The tax rate paid by players on cryptocurrency trades is according to the amount of crypto casino winnings they earn in a particular year. Therefore, gamers can decide to claim earnings on their crypto winnings profits during the years they have low income. In some situations, this will influence your owed taxes. This is because taxpayers who make less than $40,000 have a 0% tax rate for every cryptocurrency that is traded after a year.
Gift out your crypto casino winnings
Giving out crypto gifts comes with certain tax privileges as every cryptocurrency gifted out has no revenue tax obligation. However, crypto gifts that are worth more than $15,000 would require players to present a gift tax form for informational reasons. Although it might appear as an extreme measure to follow, giving out your crypto winnings to friends and family is a great way to evade taxes. Whoever you send them to will receive tax privileges too, as accepting crypto gifts isn't regarded as taxable. However, whoever you give your crypto casino earnings to must monitor the value of the cryptocurrency after receiving them. The crypto's original worth will be used to determine any loss or gain whatsoever whenever the cryptocurrency is traded.
Trade your crypto winnings through 401-K or your IRA
Setting up a retirement account will assist you in building your crypto wealth without tax obligations. However, you must understand that you will not have access to your saved funds until you reach a particular age. Although normal retirement accounts usually have tax-free revenues deposited into them, every profit and subsequent cashouts are always taxed.
On the other hand, the funds deposited into Roth IRA retirement accounts are often taxed, and all profits and cashouts are always tax-free. For instance, players who intend to trade their crypto winnings in a Roth IRA will not need to pay income tax until they withdraw their funds. However, not every IRA provider allows brokers to invest directly in crypto.
The good news is, independent IRAs enable players to save their crypto casino winnings in different investments like other cryptocurrencies, real estate, and valuable objects. For players below 50 years old, they can contribute $6,000 yearly altogether to their IRA accounts, independent or not. Some of the independent IRAs include Coin IRA, Bitcoin IRA, and iTrust Shares.
Employ a crypto specialist certified public accountant
Going through the tax code all by yourself could be exhausting, but hiring a crypto specialist will make your task a lot easier. Although it could be quite expensive to hire one, employing a certified public accountant will prove to be worth the money spent. A CPA conversant in crypto can help you identify the techniques required to reduce your tax obligations.
Donate your crypto casino winnings
Donating your crypto winnings could be a considerable way of contributing to significant purposes. Practicing this will result in an unusual situation where the IRS enables crypto brokers to reduce their tax obligations. In such circumstances, taxes are not imposed on crypto trades by the IRA. Every crypto winnings given into donation a year after they were earned will be reduced according to their fair market valuation during the time they were donated.
Obtain a crypto loan
Players who are aiming to withdraw their crypto casino earnings should consider obtaining loans using their crypto earnings as collateral. Such a move is regarded as non-taxable by the IRS. However, you need to ensure that the loan interest rate is favorable.
Move to a region with low tax rates
Gamblers can decide to migrate to a state or country with low tax rates to reduce the taxes on their crypto casino earnings. For instance, states like Wyoming, South Dakota, Florida, New Hampshire, Alaska, and so on, currently have no revenue taxes on crypto. Besides that, Portugal does not place tax obligations on crypto trades.
Use them
You can hold cryptos without having to declare them anywhere. Using an anonymous wallet can guarantee your stash won't be related to your identity. However the moment you want to cash out is the moment when it's most difficult to retain this anonymity. What if you don't cash out though? Nowadays there a lot of business accepting cryptos therefore spend them. Either to purchase some products or hire someone's services and you won't have to worry about taxation.
Final thoughts
Although you will be subjected to tax obligations whenever you trade your crypto casino winnings, there are several ways you can escape or reduce your taxes. You could decide to obtain a crypto loan, employ a CPA, donate some of your crypto casino earnings, or obtain returns in a penniless year. However, whenever you choose to invest in crypto, gamble responsibly.
