How to reduce your crypto tax bill before year-end

cointelegraph.com:

While 2022 has been a year to forget for most crypto investors, the daunting task of filing crypto tax returns before the end of December remains. Many investors worry about unrealized losses on their crypto portfolio, while a failure to report crypto assets and transactions on tax returns could land North American investors into hot water with the IRS.

To aid in filing your crypto taxes, cryptocurrency portfolio tracking and tax platform Accointing by Glassnode offers an easy solution to instantly import and review all crypto transactions and fill your crypto taxes in just a couple of clicks. What is more, its tax loss harvesting tool helps investors minimize what they owe in taxes.

Most crypto assets, especially cryptocurrencies like Bitcoin, have seen significant price erosion in 2022. Some crypto investors may be tempted to reduce their tax bill by underreporting income. Such a strategy, however, would invariably lead to punitive action initiated by the IRS. To avoid that, US crypto investors need to understand all tax provisions available and utilize them to optimize their tax liability to the fullest.

For example, suppose losses from selling crypto assets exceed capital gains accrued by selling profitable positions. In that case, investors can deduct up to $3,000 against ordinary income and carry forward any remaining loss to the next accounting year. This excess can then be adjusted against any capital gains arising in the following year.

Investors could also sell digital assets that are trading at a price lower than their acquisition cost, only to buy them later within the same year. Although the IRS has excluded stocks and securities from this tax-saving tactic, crypto assets are not treated similarly. As a result,