You can use numerous ways to get involved in Crypto economy. One of the most popular strategies is to HODL onto your bitcoin. You see that I made a mistake, right? This mistake is pretty popular amongst the crypto community. It is a misspelling of the word hold. This term was created in 2013 , by an investor who was holding onto his bitcoin, even though the price went down. He wrote “I am HODLING”, instead of writing I am holding. This mistake was liked by many crypto users and today it’s one of the most recognizable terms in the Bitcoin community.
HODLERS are investors. They invest in Bitcoin and strictly believe in the long-term value of the cryptocurrency. Ongoing price changes don’t affect them. HODLERS believe that Bitcoin will have bigger value in the future and that’s why they are holding onto their BTC.
I’m sure you’ve already known this term, considering that you’re a Bitcoin lover. But if you haven’t heard of it and you found yourself following this strategy, now you know that you’re a HODLER too.
Possessing Bitcoin is considered as possessing a valuable asset . Several countries have created regulations and taxes for investing in Bitcoin. As a HODLER you will also need to do taxes and here’s how.
Crypto investors may be subject to taxes with a different percentage. According to IRS (Internal Revenue Service), this is how Bitcoin taxation works:
Short term holdings – 39.6%
Long term holdings -20% + the 3.8% NIIT
Taxation on cryptocurrency is not a global phenomenon. But, the US, central European and Asian countries have already implemented several regulations.
Most of the crypto HODLERs don’t even know that they need to pay taxes. Recent research shows that hardly anyone is paying their crypto taxes. Find out if you’re also not paying your taxes. And if you need to pay taxes, learn how to do your Bitcoin taxes with this calculator .
Mostly, HODLERs don’t have to pay the taxes, but a crypto community is changing day by day, and we have to be careful. The wisest thing to do would be to keep your own records of the transactions you make and changes the regulation parties are making.
How to avoid being taxed if you’re a HODLER?
IRS recognizes selling and buying a cryptocurrency as selling and buying gold or a value stock. Every single transaction that you’ll make could be monitored by IRS if they acquire the user Data from your wallet platform. You must be careful and cautious. And if you’d like to avoid paying taxes with specific transactions, you can donate your crypto to charity.
Donating your bitcoin to a public charity can help you save your money on taxes. Note that, this only works for public charities, and not a private foundation. If you are planning to sell your bitcoin and acquire fiat (USD, other national currencies), you will have to pay taxes and your loss will be higher.
Your strategy of holding onto a coin might be the best one in some cases. Bitcoin bubble theory believers point their fingers at HODLERs and laugh at them. Some believe that Bitcoin is a huge bubble that will eventually burst. Some say that it has already sunk down (from 20K to almost 6K in a few months), but it’s still popular.
Bitcoin and other cryptocurrencies are adapting to our world . We are creating a new infrastructure for the money of the future, and maybe holding onto your coin isn’t a bad idea after all.
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