Thread by @APompliano

In 2014, the IRS decided to treat cryptocurrency as property for tax purposes. This matters for 2 reasons:

1) it clarified sells/exchanges of bitcoin trigger a 'taxable event'

2) it means you can stack/trade bitcoin tax free. FEW.

This thread may save some of you ~$2,000 👇🏽👇🏽

2/ Let's start with the basics:

A taxable event is "an action or transaction that may result in taxes owed to the government."

Since the IRS treats crypto as property, you trigger a taxable event every time you sell, trade, or buy something.

3/ Typically Tax Day is tomorrow (April 15th) but due to COVID, it's pushed back until May 17th.

That means May 17th is the last day to file your taxes this year and you have 30 days to apply this knowledge to reduce your 2020 taxes.

4/ So how much do I owe in taxes on gains if I sold?

If you held for < 1 yr, you pay according to your tax bracket.

If you held for > 1 yr (as a single filer):

- 0% if your income < $40k

- 15% if income was between $40k and $441,450

- 20% if your income > $441,450

5/ What if I traded some BTC for ETH?

In 2017, the IRS decided that like-kind transfers only apply to real estate, so crypto-to-crypto trades are still a taxable event.

The difference in the price of the asset when you bought it and when you made the trade is taxable income.

6/ How come I have to pay taxes if I buy a Tesla with bitcoin?

Because bitcoin is considered property, not currency, it triggers a taxable event anytime you use it to buy something.

7/ There are 2 ways to avoid the headache above and not have to stress about crypto taxes:

1. Hodl, and never sell (or trade or buy something with it) 💎 🙌

2. Open an IRA with @choicebykt and buy, sell, trade, and stack within it without triggering a taxable event.

8/ Because the government wants to incentivize saving for retirement, they offer significant tax benefits for putting money away in your retirement account.

Don't believe me? Check out how Peter Thiel used his Roth IRA

https://twitter.com/APompliano/status/1366188811303141379

9/ What differentiates trading within an IRA like @choicebykt from an exchange is that your gains are not considered realized until you withdraw them from your account.

You could buy bitcoin, hodl to $100k, sell, use the profits to buy $TSLA, and not owe a penny in taxes.

10/ If you open a Roth IRA like Thiel, the advantages are even sweeter -- because you pay taxes on the money before contributing, you don't have to pay ANY tax when you withdraw it, as long as you wait until you're 60.

However, contributions are not tax deductible.

11/ If you open a Traditional IRA with @choicebykt, contributions are deductible but you have to pay income taxes on your withdrawals, even after the age of 60.

Because the IRS pushed Tax Day back, you have until May 17th to make 2020 contributions.

12/ If you contribute the maximum amount of $6,000 to your traditional IRA, you could save up to $2,000 on taxes this year 🤯

As with everything DYOR, not everyone is eligible to contribute to a Roth or Traditional IRA.

13/ To help you capitalize on the extension, I partnered with @choicebykt to give a $62.50 bonus (IYKYK) to everyone that funds their account before May 17th.

What are you waiting for? Enjoy :)
retirewithchoice.com/pomp