Crypto Taxes in the USA – How Much Does the IRS Take?

Cryptocurrencies like Bitcoin, Ethereum, and Solana, have taken the financial world by storm, with new digital currencies being developed and used to make online sales, purchases, and even trades. These digital currencies are subject to tax as they are classified as property. Understanding how cryptocurrencies are taxed is crucial for investors and users alike.

The Internal Revenue Service (IRS) treats cryptocurrencies as property for tax purposes. This means that you are only taxed when you realize a gain from either selling, trading, or using cryptocurrrencies. The amount of tax you owe depends on how long you held the crypto before disposing of it and your overall income. Capital gains from cryptocurrency are categorized as either short-term or long-term.

Short-term gains apply to crypto owned for one year or less and are taxed as ordinary income. The tax amount can range between 10% to 37%. Long-term capital gains is applicable to crypto held for more than a year. Long-term gains benefit from favorable tax rates of  0%, 15%, or 20% depending on your income level. These tax rates are generally lower than ordinary tax rates when applied to short-term gains. 

For example, there are a few promising crypto presales to watch that can help you gain capital once they go public. Let’s say you participate in the presale of Pepe Unchained and purchase tokens at $0.10 each. The project succeeds and the token increases in value to $1.00 after launch. You could benefit from long-term capital gains rates by holding the tokens for more than a year before selling. This results in a lower tax rate on your gain compared to short-term holdings.

So, presales can be an opportunity to acquire tokens at lower prices. The main reason why crypto projects sell coins or tokens is to fund their marketing and development for public launch. If the cryptocurrency’s value increases after the launch, you can potentially benefit greatly by selling it. However, there are some key points you need to consider regarding presales when it comes to filing crypto tax in the United States. 

The purchase of tokens during a presale is not a taxable event. But when you want to exchange these tokens or sell them, taxes are applicable. Additionally, the holding period for determining short-term or long-term capital gains starts from the date of the token purchase, and not the public launch.

You should always keep a record of your presale purchase. Ensure that you have accurate records of the amount you paid at the presale, the date you made the purchase, and if there were any subsequent sales. This information will be necessary for the accuracy of the calculations on your capital losses or gains. 

You can also offset gains with losses. This means that if you have gains from selling your tokens, you can use losses from other cryptocurrency transactions to reduce these gains. This strategy can help lower the overall taxes you pay.