Avoid taxes by gifting Bitcoins: Many cryptocurrency investors are struggling with the taxation on cryptocurrencies assets. Recently however, a tax-free exemption was included in IRS pertaining to digital investments. While there are taxes on each and every cryptocurrency transaction but gifting one means that you will not have to pay any taxes. You can also donate Bitcoin as well as other cryptocurrencies without paying any taxes.
The lone cryptocurrency loophole:
The US government is at the forefront when it comes to taxing cryptocurrency holders. This is the reason why there are hardly any loopholes when it comes to cryptocurrency taxation. This is the only loophole which currently exists for avoiding cryptocurrency tax. On the other hand, the exchange is also looking at customers who spend more than $ 20,000 in cryptocurrency transactions on exchanges Coinbase.
Most of the cryptocurrency investors by now are aware that they have to pay taxes on each and every transaction. The only way currently to avoid taxation is to gift the cryptocurrencies or Bitcoins. This will ensure that you do not have to pay any tax on it. You can also think about donating Bitcoins. Also, according to a provision gifts up to $ 15,000 do not require any documentation. The meaning of the term gifting has also been curtailed to donating rather than giving employee bonus or for other such purposes.
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In case, you are gifting someone Bitcoin worth more than $ 15,000, you will have to file the gift tax return.
This, however, does not free the individuals or the institutions from taxes in the future. When the individuals or institutions earn any profits in the future, they will be liable for taxation. Any transactions which are conducted by those institutions or individuals will be subject to the regular rules and regulations. This provision will not absolve them of any profits and in the future.
On the other hand, the amount which can be gifted over a lifetime has increased significantly. The total amount which a married couple can gift is around $ 22.4 million. This amount can be gifted without any taxes.
Thus, for now, the only way in which you can avoid paying taxes on the transfer of cryptocurrencies to gift it to someone. On the other hand, you can also think about donating it to someone. It remains to be seen whether, in the future, there will be any other cryptocurrency loophole which can benefit the investors or not. For now, however, this one looks to be the sole taxation loophole available.
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