Crypto and taxes are quickly evolving worldwide, with a lot of changes and trends coming next year for investors.
As we enter 2023, let’s delve into some of our predictions for crypto taxes in 2023, how investors can prepare for them, and some tips to optimize your crypto tax situation.
In this article:
Will 2023 be good for crypto?
2023 may be the year when crypto bounces back from the bear market felt during 2022.
2022 brought the war in Ukraine, rising inflation and interest rates, and an 80% retracement on major digital assets.
2023 may be the year of recovery for the leading digital assets and the appearance of new players, given the elimination of some providers.
#1: Crypto-friendly countries get harsher taxes with new bills
With the global trends of regulations, we believe there will be fewer countries with an absence of crypto taxes or with a lot of tax-friendly measures for investors.
#2: Tougher tax and legal compliance laws for crypto providers
The effect may be positive in bringing maturity and protection to the space, but due to situations like the FTX debacle, it also may bring measures that hinder innovation and set the industry back.
We will be paying more attention to the MiCA bill in the EU and the developing regulations in the US and their impact.
#3: High tax bills to pay despite big losses in 2022
Investors who sold crypto in early 2022 may have had big wins but not necessarily be liquid from those gains to pay the taxes coming in 2023.
In this scenario, big tax bills are coming, but few deduction opportunities for individual investors to write off the losses from these situations.
#4: New regulations will bring more compliance needs for crypto companies
The new trend of regulations will bring more clarity to consumers and new guidelines for institutions dealing with crypto.
#5: Multiple jurisdictions impose different types of taxes on crypto transactions
Different tax authorities (federal, state, and local) may impose different types of taxes on crypto transactions, making it more costly to get involved in crypto and bringing more headaches to people in the crypto space regarding tax compliance.
One hot topic recently drawing people’s attention is the application of sales tax on certain crypto transactions by over 30 states in the US.
With this measure, in addition to paying income taxes to federal and states, you may also be subject to sales tax when you have crypto transactions such as NFT sales.
The best crypto tax software: CoinTracking
The best crypto tax software in the market is CoinTracking.
You can import your trades using CSV or API, track your gains/losses, and generate tax reports according to your preferred accounting method.
CoinTracking is your full crypto tax solution for:
DeFi and NFT support with our ETH+DEX importer.
25+ advanced reports, including which coins offer you a tax-free rate.
Automatic capital Gains, according to 12 accounting methods (e.g., FIFO, LIFO, HMRC, ACB), accepted worldwide.
Generating complete Tax Reports in your country.
Crypto taxes with no errors: CoinTracking Full Service in the US.
CoinTracking also offers a Full Service for US traders. A crypto reconciliation tax expert from Polygon Advisory Group, a leading US crypto tax firm, will review your CoinTracking account, help fix any errors, and ensure you submit your crypto tax reports error-free.
Do you have any crypto tax questions? Check the best guides:
How are rebase token protocols taxed?
Do you pay taxes on fan tokens?
Do you pay taxes when trading stablecoins?
How is Yield Farming Taxed?
DeFi Taxes: The Complete Guide.
How to save taxes with a Bitcoin IRA.
Do you pay taxes for receiving Bitcoin tips?
Uniswap Taxes Guide
How to calculate taxes with Bitcoin dollar-cost averaging?
FIFO for crypto taxes? Implications of accounting methods.
NFT Taxes: The Complete Guide.
Is Bitcoin taxable? The ultimate guide for 2021 taxes.
This post is part of the Crypto Taxes AMA series. Follow our weekly AMAs on Twitter where our expert CPA, Sharon Yip answers your crypto tax questions. You can download 35+ AMA crypto tax reports for free.
Disclaimer: All the information provided above is for informational purposes only and should not be considered as professional investment, legal, or tax advice. You should conduct your own research or consult with a professional financial advisor when investing.