Cryptocurrency Tax Guide For US Investors In 2022


If you are an investor who traded in Cryptocurrency in 2021, then it’s only natural you had to file your tax return this year, sometime between January and April this year.

If you missed the deadline, then it’s obvious that you had to pay the issued penalties in case of all submissions that were made after the deadline.

Did you know that all non-fungible tokens and Cryptocurrencies are still being treated like ‘property’ for taxation purposes in the U.S.?

This is in accordance with the 2014 notice published by IRS (Internal Revenue Service), which mentioned that all digital assets would receive the ‘capital gains tax’ just like stocks.

Due to the appearance of the DeFi (decentralized finance) concept in 2021, the concept of taxation has become murky.

So let’s check out the Cryptocurrency tax guide for investors hoping to gain an immediate edge in the United States in 2022!

Cryptocurrency Tax Guide For US Investors In 2022: What’s Relevant?

Without wasting any more time, let’s dive straight into the complexities of the Cryptocurrency tax guide, relevant in 2022 so that you start your Crypto trading with the immediate edge really soom. . Don’t forget to keep scrolling for detailed information on the same.

Timing Is Of Essence:

First things first. The tax incurred from Capital Gains related to Cryptocurrencies includes,

  • Selling any Cryptocurrency like Bitcoin for fiat currency like the Japanese yen or the U.S. dollar.
  • Sending any Cryptocurrency like a gift of sorts, anything over 15,000 dollars, as per the regulations of the 2021 financial year.
  • Buying any goods or services with the help of Cryptocurrency, even something small like a coffee.
  • Swapping or trading digital assets, including purchasing non-fungible tokens utilizing Cryptocurrencies.

Moreover, timing is truly of the essence in the world of taxation. For instance, the dates for filing your taxes for the financial year of 2021 were between 24th January and 18th April. People who missed the tax filing deadline naturally had to face the wrath of penalties issued against them. So make sure you don’t miss any deadlines while filing for tax.

Paying Taxes: How Much Is Too Much?

If you want to gain an immediate edge over the competition, you need to find out at least how much tax you have to pay to the government for trading any Cryptocurrency.

You can easily calculate the tax amount you owe to the government in the United States by simply finding out how long you have held on to assets before selling them to another investor. Another factor on which your taxation amount depends is the tax bracket you belong to! This can easily be divided into different categories,

●      Short-Term Capital Gains:

The profits that you have earned from holding Crypto assets for little less than one year are usually taxed at a rate that’s directly related to your taxation bracket. In fact, you can choose to offset your income tax on any number of losses by a total amount of 300o dollars. Any loss that exceeds the above mentioned amount will naturally be carried forward.

Check the table mentioned below for a better understanding of how short-term capital gains functions.

Rate Single Filers Joint Filers (Applicable For Married Couples) Household Heads
10% Up to 9,950 USD Up to 19,900 USD Up to 19,900 USD
12% (9,951 to 40,525) USD (19,901 to 81,050) USD (14,201 to 54,200) USD
22% (40,526 to 86,375) USD (81,051 to 172,750) USD (54,201 to 86,350) USD
24% (86,376 to 164,925) USD (172,751 to 329,850) USD (86,351 to 164, 900) USD
32% (164,926 to 209,425) USD (329,851 to 418,850) USD (164, 901 to 209, 400) USD
35% (209, 426 to 523,600) USD (418,851 to 628,300) USD (209,401 to 523,600) USD
37% 523,601 USD or more 628,301 USD to more 523,601 USD or more

●      Long-Term Capital Gains:

If you have been holding Crypto assets for over an entire year, the capital gains tax will be naturally relatively lower. In this case, the taxation amount will depend either upon an individual’s income or upon the combined income of a married couple. It could very well be o% or 10% or even 25%.

And It’s A Financial Wrap

It is important to note that you need to pay tax on capital gains that you end up making from such events and not the entire amount of assets that were disposed of. You can easily calculate this by finding the total difference between the actual amount paid for buying the asset and the price at which it was sold.

Don’t forget to let us know your thoughts on the same, in the comments below.