United

April

According to Danny Talwar, the head of tax at crypto tax software startup Koinly, one of the most common mistakes people make on their tax returns is failing to use tax loss harvesting. 
Speaking to Cointelegraph ahead of the April 18 tax deadline in the United States, Talwar said that for investors who experienced losses in the market between 2022 and 2024, this is the last chance to report the loss and “try and get some of that benefit” by offsetting it against any gains made the previous year. 
When an investor sells at a loss to offset the amount of capital gains tax owing on the sale of lucrative assets, this is known as tax-loss harvesting. “It’s probably the biggest mistake people make, not realizing they can use tax loss harvesting,” Talwar says. 
“A lot of people may think, ‘Oh, I haven’t made any money on crypto, so it’s not taxable this year,’ but you can get that benefit.” So that’s definitely one of the most important methods folks can employ.” However, he said that in order to claim a loss, you must “have realized the loss in some way.” 
“The IRS was quite clear that you can’t claim a loss on something if its value has gone down and you haven’t actually sold out of it.” Tax loss harvesting, according to Talwar, might lead to a “wash sale,” which is an Internal Revenue Service (IRS) law that prohibits a person from selling or exchanging stock or securities at a loss and then purchasing the same asset within 30 days of the sale. 
Crypto is presently not subject to these restrictions since digital assets have not been classed as securities; however, U.S. President Joe Biden’s next budget plan has advocated a crackdown on crypto wash sales. “Rules can change very quickly and retrospectively.” So you really have to be careful and recognize the hazards.” 
The IRS, according to Talwar, may still check whether a transaction was real “if you’re doing something just to get a tax benefit.” “I wouldn’t encourage people to do it, but people are doing it anyway.” After the IRS explained the situation, Talwar feels that anyone caught up in currency scams or exchange collapses like FTX may not be able to recoup their losses. 
“The IRS actually came out and clarified their approach on that because people were wondering whether they could claim losses on things like FTX or even rug pulls,” he explained. Finally, according to Talwar, “the best strategy is to actually pay tax” and seek expert assistance ahead of tax season. Speaking with an accountant can assist in determining “what reliefs and benefits are available.” 
“Obviously, using an accountant can help you navigate any of that complexity or challenge around what to do.” If you don’t have your documentation ready, Talwar says you may ask for an extension, but you’ll “still have to pay the taxes by April 18.” 
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The post <a rel="nofollow" href="https://bitcoinworld.co.in/biggest-mistake-is-not-using-tax-loss-harvesting-koinly-head-of-tax/">‘Biggest mistake’ is Not Using Tax Loss Harvesting: Koinly Head of Tax</a> appeared first on <a rel="nofollow" href="https://bitcoinworld.co.in">BitcoinWorld</a>.

‘Biggest mistake’ is Not Using Tax Loss Harvesting: Koinly Head of Tax

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