Cryptocurrency dominated the 2021 stock market. Every day you could hear top stories on magazines, TVs, and radios about bitcoin, there, Dogecoin, Solana. The crypto industry is stepping up in 2022 with around a $3 trillion market cap.
The abrupt increase has led to the government and another non-governmental organization peeping in to find a way to regulate it. Some say their citizens are losing a lot of money in crypto. They want strict rules to tax and protect investors. After all the discussions with crypto founders, there are high chances that more crypto regulations will pop in, a report by CNBC.
Other nations like USA and China have already set their rules. So if you have purchased some digital assets, you need to be prepared. Here are the top 3 ways you could set your mind in 2022:
Be organized
From 2022, those investors who perform transactions above $1000 will have to submit their tax reports to the federal government for verification. If you are among them, keep a calculator next to you to calculate the losses and profit you made.
This is very challenging, especially if you are trading with different currencies or possess various wallets. You must be smart in the way you sort your things. Investors must keep their records to identify the amount of tax taken by regulators. A report from the Internal Revenue Service website.
Save some time and keep a clean record. A certified public accountant Shehan Chandrasekara says it’s best practice when you keep a three-year transaction record. She is the head of tax for CoinTracker, a company that calculates crypto tax.
Start your tracking journey.
It would be best to employ tracking software to avoid complex calculations. For example, various management software can calculate gains and track your yearly transactions.
By doing this, you are building a good tax profile that the IRS needs as proof of tax liability. Furthermore, you can hire a CPA who will guide you on the reporting process. In addition, the CPA might be of help when it comes to predicting the future, especially in the regulation part.
Stay updated on new crypto regulations.
There have been several discussions about crypto regulations, which are still pending. This makes it hard to predict what will happen in the coming years. However, being aware of what is being discussed can give you a hint.
For example, there was a proposal about the “wash sale” regulation. This will become law in 2022. Traders will not purchase back the currencies or digital assets when they sell them at a loss.
The US also came up with bipartisan infrastructure, signed by President Joe Biden. All digital assets, like non-fungible tokens and cryptocurrency, will have to report any gains in the industry. In addition, anyone who indulges in investment must fill out form 1099.
Fortunately, the law will start functioning in 2024 due to some minor rectification under the process. But the lawmakers are still looking for loopholes to set strict rules to protect their fiat currencies.
Despite all that, millions of youth are still interested in investing in crypto. The industry’s growth is very promising. Even financial advisors have started allowing their clients to stake part of their profile on crypto. But if you are a newbie, opt for the most popular ones like bitcoin and Ethereum. Then, gather more information and ask for directions from experts.
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