income tax

How to calculate crypto tax 2023

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An important factor in crypto is that crypto taxes are cost basis, that means tax will be collected depending on your Capital Gain (how much you earn/profit) and your income. So, you must be paid one capital gain tax and another is your income tax. Don’t worry, both calculations are very simple. So, now I’ll tell you how to calculate crypto tax 2023 and the calculation of taxes briefly in the upcoming paragraph.

How to calculate crypto tax 2023

Types of paying crypto taxes?

We all belong to different countries and crypto tax rates vary per country. So you must check your country’s crypto tax rate. It’s very important to you because there you’ll know which types of taxes you’ll pay for your crypto transactions.

Hey! We have already discussed in the previous paragraph that crypto tax is two types one is your capital gain tax and another is your income tax which is based on how much you earn from crypto. Firstly, we’ll discuss Income Tax, then we’ll discuss Capital Gain Tax.

Crypto Income Tax

Your payable tax on crypto under Income Tax is…

  • Salary paid by crypto
  • Crypto mining
  • Interests received from crypto
  • Referral bonuses
  • Airdrops
  • Staking rewards

Let’s give you an example. You mined/bought 0.05BTC crypto, and it was received on 14th Dec 2022. The price of 0.05BTC that day was $1840. So your income is $1840, and you’ll pay income tax at the regular rate on that amount. It doesn’t mean you are free from capital gain tax; capital gain tax will be applied when you sell, gift, spend or trade.

Crypto Capital Gain Tax

Your payable tax on crypto under Capital Gain Tax is…

  • Trade crypto
  • Gift crypto to your family, friends, or others
  • Spend crypto on goods or services
  • Sell crypto in currency

When you sell, spend, trade, or gift your buying crypto (0.05BTC) at that time have profit or loss. That profit is called Capital Gain and Loss is called capital Loss. Capital Gain tax needs your COST BASIS. COST BASIS means which is your total buying cost. Simply we can say the 0.05BTC buying cost is $1840 plus your transactions or others fees (assume $60) which are payable with buying cost.

So now the brought cost or cost basis is $1900. When you get your COST BASIS in this way at that time, you subtract your sold amount from the cost basis. Suppose you sell your 0.05BTC at $2150. After selling, your profit/gain amount is $250. So tax will be paid on $250. Every country has different crypto tax policies, so please check your country’s crypto tax rate.

How to save tax on crypto

Below we discussed crypto tax savings in many different ways. You can choose any way to save or protect your crypto and your other taxes.

  • When you buy some crypto coin at that time, you focus on selling it after 1 year. Because when you sell a coin under 1 year it’ll be taxed under STCG (short-term capital gain). and if you sell after 1 year it’ll be under LTCG (long-term capital gain). That way you can save a huge amount of money.
  • Sell your coin in your low-income year. Keep your coin hold when you think 2025 year is your low-income generate at that time you will sell your coin. So that way you can save tax and also will help to save tax as LTCG.

These are some tax-saving methods to save crypto tax. Hey, it is highly recommended before you apply these tips or strategies, please take the help of your nearest professional. A proper strategy of tax saving plan can give you a good result.

Crypto tax rate in different countries

Now we provide you with some country’s tax policies, please click on your country…

Crypto tax-free countries

These are the lists of some crypto tax-free countries…

  • Germany isued a notice which declared that bitcoin as crypto will be no tax when it is exchanged to Euros or 0% when used for payments.
  • Denmark’s individuals are not paying crypto tax, but corporations are under-taxable.
  • South Korea does not have regulations about crypto tax. That means South Korea’s transactions in crypto are fully tax-free.
  • Singapore digital coins are not considered commodities. So individuals are not paying taxes on crypto, but corporations are taxable.
  • Belarus, Slovenia, Portugal, and Hong Kong.

Best crypto tax calculator

A crypto tax calculator is software which helps you exactly calculate how much you are taxable, profits, losses, and your income in the current year. You can generate a tax report in four steps 1. Connect your wallets and exchanges, 2. Review your transactions, 3. Generate your tax report, 4. Share your report.

Some points are very important in using a crypto tax calculator, that’s 1. Available integrations, 2. Supported countries, 3.Reputation and security, 4. Pricing per year and transaction limit, 5. Ease of use and customer support.

After checking all of these qualities we found some calculators which are best for crypto tax calculations.

1.Coin Tracker

CoinTracker is a leading cryptocurrency tax calculator. It aims to provide crypto investors with the basic tools to build wealth and optimize their portfolio. It currently has 1 million users and has already tracked 3% of the crypto market cap and $50 billion of crypto assets.

Features
  • Portfolio tracking across wallets and exchanges
  • Automatic tax filing with TurboTax
  • Multiple crypto tax forms and cost basis methods
  • Tax-loss harvesting

Generally it’s a premium calculator but here you can use free $0 for 25 transactions, and above transactions will be available under the premium version of Coin Tracker.

2. Koinly

Koinly helps you to check your total holdings, trading activity, generate your income, and even reduce your taxes for the following year. It is available in more than 20 countries.

Features
  • Free report preview
  • Form 8949 & Schedule D
  • TurboTax & TaxAct
  • Supports DeFi, margin trades, and futures

It will be free $0 for 10,000 transactions (limited features), and provide a useful mobile app. but koinly don’t have any options for unlimited transactions.

Thanks for reading our article, If you have gained some knowledge about how to calculate your crypto tax so please share to your family, friends and colleagues. For more information please don’t hesitate to contact us.

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